William Byrnes' Tax, Wealth, and Risk Intelligence

William Byrnes (Texas A&M) tax & compliance articles

TaxFacts Intelligence March 31, 2022

Posted by William Byrnes on March 31, 2022


Robert and I have an exciting announcement for our Tax Facts subscribers. In February, our publisher ALM will be launching Tax Facts Premium, a new add-on product that provides valuable tools and content, including:

  • calculators (tax, retirement income, investment, personal finance, business, and more)
  • practice aids (buy sell agreements, as well as documents related to business life insurance, estate planning, retirement planning, and employee benefits)
  • soft skills (practical guidance on how to build and maintain clients)
  • archives (archived content including featured articles and the intelligence weekly).

Also, the Texas A&M graduate program for tax, wealth, and risk management is accepting applications from financial professionals with at least five years of industry experience for the summer. Even though our graduate program has grown to over 750 enrollment, the typical enrollment for a course section is between 20 and the maximum of 30 so that each student receives meaningful feedback throughout the course from the full-time academic faculty and renowned professional case study leaders, and each other via teamwork and peer review. Learn more about how we educate and position the industry’s leaders: https://law.tamu.edu/distance-education

Prof. William H. Byrnes         Robert Bloink, J.D., LL.M.

IRA owners are only entitled to limited protection in bankruptcy.  However, the dollar limit is set to increase once again starting Friday. We also have information on the new RMD rules that could have a negative impact on successor beneficiaries –as well as newly proposed DOL rules that could make it much more difficult to obtain a prohibited transaction exemption if finalized.  Read on for more.

IRA Bankruptcy Exemption Set to Increase April 1.  Federal law limits the amount of IRA funds that are protected from creditors when the IRA owner files for bankruptcy (unlike 401(k) funds, which are fully protected from creditors in bankruptcy).  Under current law, up to $1,362,800 in IRA funds are protected from creditors in bankruptcy.  The limit is set to increase to $1,512,350 beginning April 1, 2022.  The dollar amount is adjusted for inflation only every three years, so the new limit will apply through March 31, 2025.  However, it’s important for clients to remember that the laws in their state may also be relevant.  Some states grant creditor protection for all IRA funds.  Others even protect IRAs from being accessed to satisfy a legal judgment.  For more information on the rules that apply to IRAs and inherited IRAs in bankruptcy, visit Tax Facts Online.  Read More 

New RMD Regs Create Confusion for Successor Beneficiaries.  The new proposed RMD regulations could create confusion and problems for successor beneficiaries, who are beneficiaries of an original IRA beneficiary.  Successor beneficiaries are typically subject to the ten-year payout rule post-SECURE Act.  If the original beneficiary was subject to the ten-year rule (so was not an eligible designated beneficiary), the successor must continue payments within the same ten-year window.  If the previous beneficiary was an EDB and was using the life expectancy method, the successor beneficiary obtains a new ten-year window.  A beneficiary using the ten-year window must take annual RMDs if the original beneficiary died after his or her required beginning date (otherwise, no annual RMDs are required).  So, the successor beneficiary must first determine whether the original account owner died before his or her required beginning date to determine whether annual RMDs will be required within the ten-year payout window.  In many cases, that could be difficult, especially if the IRA has changed custodians so that the successor beneficiary may not know how old the original account owner was at death.  For more information on the new proposed RMD regulations, visit Tax Facts Online.  Read More  

DOL Proposed Rule Could Limit Availability of Prohibited Transaction Exemptions.  The DOL has proposed a new rule that would make the process for obtaining a prohibited transaction exemption much more difficult.  If passed, the changes will apply only prospectively, 90 days after the publication of the final regs in the Federal Register.  The proposed regulations would require that communications with the DOL prior to submitting a formal application for exemption will become part of the administrative record that can be requested by the public.  Applicants would not be permitted to approach the DOl on an anonymous basis.  The regulations would impose new terms with respect to the independent fiduciary or appraiser that may be required.  The current regulations provide information about when the fiduciary or appraiser will be considered “independent”, providing that the fiduciary or appraiser is independent if less than 2% of their revenue is derived from parties to the transaction (though its possible that they could achieve independent status if the revenue is less than 5%).  The new rules would make the standard stricter, and require analysis of the revenue from the prior tax year and projected revenue for the current year.  If an appraiser and a fiduciary are required, the appraiser must be independent of both the fiduciary and the applicant.  It’s also possible that the individual could be deemed not “independent” if they have an interest in the transaction or future transactions of a similar type.  For more information on new PTE 2020-02, visit Tax Facts Online.  Read More 

Look in your Tax Facts Online app for our continuing analysis of 2022 legislative and regulatory updates, weekly intelligence, and the impact on planning for a client’s wealth preservation and growth.

Wealth & Risk Management Degree for Industry Professionals – learn about the graduate degree here: https://law.tamu.edu/distance-education

Texas A&M, operating budget of $9.6 billion (FY2022) and capital budget of $1.9 billion, is #1 for U.S. public universities, one of only 60 accredited U.S. universities of the American Association of Universities (R1: Doctoral Universities – Highest Research Activity) and one of only 17 U.S. universities that hold the triple U.S. federal grant of Land, Sea, and Space! The law school has the #1 bar passage in Texas, and #1 for employment in Texas (and top 10 in U.S.)

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