The IRS is developing further guidance around post-death retirement account distributions as plans are seeking advice following changes made under the SECURE Act. In Law360’s article, “3 Areas Tax Pros Hope Are Clarified In IRA Post-Death Regs,” Groom principal Elizabeth Thomas Dold provided her take on the areas where agency guidance may be most needed and the importance of the agency recognizing plans complying on “good faith” until final regulations are issued.
Amendments for most calendar-year retirement plans are due by the end of the 2022 plan year, said Dold. The agency has always provided model language on required minimum distributions that practitioners can use for qualified plans and IRAs, and that language will need to be updated to reflect the SECURE Act, she said.
Practitioners are hoping the IRS will provide a similar reliance standard for the post-death minimum distribution rules, Dold said.
“The IRS has not defined good faith compliance, but [the] idea is that with little legislative history and just the statute text, it is very difficult to anticipate the IRS interpretation of the new rules,” she said.
The IRS should provide some grace to approaches and interpretations that were already taken and might continue to be taken until final regulations are released, Dold said. The stakes of getting it wrong could be high, and the IRS could help matters by issuing sample or model plan language for plan updates to reflect the SECURE Act, perhaps through guidance, she said.
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