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Jerome’s three children (ages 48, 47 and 45) are named equal beneficiaries of his IRA. His intent was to allow them to take distributions over their life expectancies and spread out the income taxes that would be owed on the annual withdrawals. He read that under the SECURE Act, the ability to stretch out the distributions has been sharply curtailed. He has asked if he needs to revisit the IRA beneficiary designation.
Under the SECURE Act, the children will have ten years from Jerome’s death to completely drain the IRA. If Jerome has charities to which he would like to contribute through his estate plan, he might consider having the IRA pass in equal parts to three charitable remainder unitrusts, naming each child as a beneficiary. There is no income tax owed on IRA funds when the balance passes to the unitrust, allowing the children to receive annual distributions on the full amount over their lifetimes, similar to taking the required minimum distributions from an inherited IRA. When the trusts end, assets will pass to the charities Jerome has named. ■