Recent legislative changes have significantly impacted special needs planning, particularly regarding retirement accounts and trusts. At Rochester Elder Law, we're committed to helping you understand these changes and optimizing your estate plan for your loved ones with special needs.
Key Updates from SECURE Act 2.0
- New RMD Ages: Required Minimum Distributions (RMDs) now start at age 73 (as of 2023) and will increase to age 75 in 2033.
- SNTs as Beneficiaries: Special Needs Trusts (SNTs) can now be more advantageous beneficiaries for retirement accounts.
- Charitable Beneficiaries: Qualified charities can now be designated as remainder beneficiaries of SNTs without disqualifying the trust from favorable tax treatment.
- ABLE Account Changes: Starting January 1, 2026, the age limit for ABLE account eligibility increases from 26 to 46.
Why These Changes Matter for Special Needs Planning
1. Potential Tax Benefits
Under the new rules, individuals with disabilities (or their SNTs) can withdraw inherited retirement funds over their life expectancy. This can lead to significant tax savings by:
- Spreading withdrawals over a longer period
- Potentially keeping the beneficiary in a lower tax bracket
2. More Flexibility in Estate Planning
The ability to name charities as remainder beneficiaries of SNTs provides more options for families who want to support both their loved one with special needs and favorite charitable causes.
3. Extended ABLE Account Access
The increased age limit for ABLE accounts will allow more individuals to access these tax-advantaged savings vehicles for disability-related expenses.
Action Steps for Special Needs Planning
- Review Existing Plans: If you have an existing special needs trust, it's crucial to review and potentially update it to align with the new rules.
- Consider SNTs for Retirement Accounts: Evaluate whether designating an SNT as a beneficiary for retirement accounts makes sense for your situation.
- Explore ABLE Accounts: If your loved one with special needs is under 46, consider opening an ABLE account for tax-advantaged savings.
- Consult with Experts: The complexities of these new rules make professional guidance more important than ever.
How Rochester Elder Law Can Help
Our experienced team at Rochester Elder Law stays up-to-date with the latest legislative changes affecting special needs planning. We can help you:
- Review and update existing special needs trusts
- Create new SNTs optimized for current laws
- Develop comprehensive estate plans that maximize benefits for your loved ones with special needs
- Navigate the complexities of retirement account distributions and tax implications
Don't let these important changes catch you unprepared. Contact Rochester Elder Law today to ensure your special needs planning is optimized for the current legal landscape.
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