Beyond investment discussions, client conversations usually fall into one of three categories: headlines, deadlines, or gossip. Successful advisors are prepared to discuss recent developments that are of interest to their clients.

In this quarterly article series, we’ll highlight recent headlines, timely deadlines, and relevant gossip to help you stay abreast of what’s new and trending in the wealth management/wealth transfer space.

Headlines: Final regulations on SECURE 2.0

On July 18, the Department of the Treasury and the Internal Revenue Service (IRS) issued final regulations updating the required minimum distribution (RMD) rules set out in the SECURE Act and SECURE 2.0.

Treasury regulations – commonly referred to as federal tax regulations, or “regs” – provide the official interpretation of the Internal Revenue Code (IRC). They instruct taxpayers on how to comply with the Treasury’s interpretation of tax law. The final regulations for SECURE and SECURE 2.0 generally follow the proposed regulations issued in 2022.

A common question concerns the 10-year distribution rule for inherited IRAs, with many clients asking: “If I don’t need the money, can I leave it in the inherited IRA account and defer receiving taxable income as long as possible?” The final regulations say that the beneficiary of an individual who had started required annual distributions and then passed away must continue receiving annual payments and cannot forgo distributions until the end of the ninth year following the death of the original IRA owner.

Advisor/client takeaway: Advisors of clients who inherit (or have recently inherited) such accounts should review them with their tax professionals to ensure compliance.

Deadlines: Income taxes and Corporate Transparency Act (CTA)

A key deadline related to income taxes is approaching in the final months of 2024: October 15 is the due date for filing a 2023 income tax return if a request for extension of time to file was requested.

And another deadline is set for the start of 2025: The Corporate Transparency Act of 2019 (CTA) requires that certain U.S. and foreign business entities disclose information regarding their beneficial owners and persons who register or form them with the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

The deadline for companies created or registered before the effective date to file their beneficial ownership information is January 1, 2025. Those companies created or registered on or after January 1, 2024, and before January 1, 2025, have 90 days to meet their reporting obligation.

Advisor/client takeaway: Advisors should encourage clients who are self-employed and clients who own businesses to seek out tax and legal professionals for advice to ensure compliance.

Gossip: Selected celebrity passings and unusual cases and rulings

We lost the following celebrities in the third quarter of 2024:

September: James Darren (my personal favorite from Time Tunnel)
August: Phil Donahue, Peter Marshall
July: Lou Dobbs, Bob Newhart, Richard Simmons, Dr. Ruth Westheimer, Shelley Duvall
June: Martin Mull, Donald Sutherland

Cases and rulings

Dickson v. Mann – unprotected asset protection: The debtor (Mann) owed the creditor (Dickson) $12 million dollars. Dickson sued Mann for the money, and Mann paid his lawyer a retainer of $585,000. Dickson demanded that Mann’s lawyer turn over the retainer funds as partial payment of the debt. A California court of appeals upheld the trial court ruling requiring the lawyer to cough up the money – a useful reminder that debtors cannot hide funds from rightful creditors, even in the creditor’s lawyer’s trust account.

Financial exploitation victims receive waiver: The IRS recently waived the 60-day deadline for two certain taxpayers to roll withdrawn funds back into an IRA. Both taxpayers had been targets of financial exploitation and had hundreds of thousands of dollars withdrawn from their IRAs. Some funds were recovered, and the IRS allowed them to be redeposited.

Advisor/client takeaways: Regarding asset protection issues, encourage clients to seek experienced counsel in this field. And while the case outlined above provides evidence that the IRS may offer some leniency to financial exploitation victims, the best defense against financial scams is education. Work with clients to help them learn how to protect their assets against the ever-increasing threat.

If you have questions on this or other wealth planning topics, feel free to reach out our Wealth Strategist Group or your Janus Henderson representative.

IMPORTANT INFORMATION

A retirement account should be considered a long-term investment. Retirement accounts generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. For more detailed information about taxes, consult a tax attorney or accountant for advice.

An IRA should be considered a long-term investment. IRAs generally have expenses and account fees, which may impact the value of the account. Non-qualified withdrawals may be subject to taxes and penalties. Maximum contributions are subject to eligibility requirements. For more detailed information about taxes, consult IRS Publication 590 or a tax professional regarding personal circumstances.

Be sure to consider all available options and the applicable tax consequences, fees and features of each option (stay with your former employer plan, roll over to a new employer plan, roll over to an IRA or cash out) before moving your retirement assets.

The information contained herein is for educational purposes only and should not be construed as financial, legal or tax advice. Circumstances may change over time so it may be appropriate to evaluate strategy with the assistance of a financial professional. Federal and state laws and regulations are complex and subject to change. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of the information provided. Janus Henderson does not have information related to and does not review or verify particular financial or tax situations, and is not liable for use of, or any position taken in reliance on, such information.