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The Secure Act + Beneficiary Elections

January 27, 2023

Have you reviewed your beneficiary designations lately? Most people don't realize that beneficiaries are a form of estate planning, and it ensures that your assets are transferred to the right person or entity upon your death. Beneficiary designations operate independently from your estate planning documents and are important to review and update as necessary. 

There are several unintended consequences to naming someone as a beneficiary if unaware of the implications. For example, if your beneficiary has special needs and receives assets through a beneficiary designation, government assistance may longer be available. 

Brian Pitell, Founder and Investment Advisor Representative, created a series of videos to discuss the "The Secure Act + Beneficiary Elections." He explains the importance of beneficiary designations and the items worth considering when making your beneficiary elections.

Part One: The Types of Beneficiary Elections 

Part Two: The Required Beginning Day + Six Tips for Estate Planning

It is important to speak with your Financial Advisor before making or updating your beneficiary designations to understand what would potentially happen when your assets transfer following your death. You can also consult with your Financial Advisor if you experience a major life or financial change (such as marriage, divorce, or a birth or death in the family). Ultimately, your beneficiary designations should align with your estate planning goals. 

Contact us if you have any questions, and let us help you plan for your future! 


BPG Planning 

Important note: 

These videos were created before the IRS Notice 2022-23 outlines additional changes. In addition, it "clarifies" details not made in the original Regulation. Please note we still await the Final Regulations, so the following is what is currently expected to pass.

As a recap, the SECURE Act created three categories of IRA beneficiaries. The "clarification" focuses on the Non-Eligible Designated beneficiaries subject to the 10-year rule. The initial understanding was that the entire IRA had to have a zero balance by the end of the 10th year. The confusion was in what was to be done in years 1-9. In February of this year, the IRS issued Proposed Regulations to "clarify" this point of confusion. Should this Regulation be finalized, and now it looks like it will, the beneficiary will need to make a required minimum distribution starting in year one based on a life expectancy calculation. In other words, the beneficiary will use their life expectancy for their RMD calculation in years 1 through 9. They can take more, but they can't take less. If there is a balance in the 10th year following the owner's death, it must all be distributed.

We should have a Final Regulation on this issue, and I would not be surprised if we see others before year-end. Possibly more to come. Stay tuned.