It can be difficult advising clients at a time when changes to the Tax Code seem possible (although not imminent). President Donald J. Trump released his tax plan noting his intention to do away with the estate tax, but it left a lot of questions unanswered regarding other issues involved in planning, like the gift tax and the generation-skipping transfer tax. The consensus seems to be that clients should continue with their estate planning, but keep things as flexible as possible. Also, regardless of what happens with tax reform, clients still need to plan for their retirement, and this month’s issue covers some important items they need to address.
One of those items is preparing for the possible end of the stretch individual retirement account. According to James Lange in his article, “The Latest Developments in the Death of the Stretch IRA,” p. 47, the chance of Congress passing a law eliminating the stretch IRA is great, and the impact will be devastating. Another item is the ability to self-certify to a retirement plan administrator that missing the 60-day rollover requirement was due to one of 11 reasons. This issue is discussed in “Simplified Treatment for Missing the IRA Rollover Deadline,” by Christopher R. Hoyt, p. 42. Thanks to a new Internal Revenue Service Revenue Procedure, taxpayers who self-certify can operate as if the transfer had been a valid rollover. Last but not least, in “Roth Segregation Strategy,” p. 51, Robert S. Keebler and Peter J. Melcher discuss how to recharacterize the assets in Roth IRAs back to traditional IRAs and how doing so can help maximize wealth in retirement.
Finally, if your practice includes advising international clients on tax avoidance, beware: You may inadvertently be facilitating foreign tax offenses, and the U.S. government has increased enforcement actions for these types of violations. “Long Arm of the Law,” p. 30, by Dina Kapur Sanna and Carl A. Marino, explains what you need to know to avoid prosecution.