SECURE Act 2,0 with over 60 provisions mostly all related to retirement plans, was enacted December 29, 2022 as part of the Consolidated Appropriations Act, 2023 (P.L. 117-238). I maintain a table of the provisions, summary from the Senate Finance Committee of each provision, effective date, and any guidance from the IRS.

SEC. 115 of the SECURE Act is called “Withdrawals for Certain Emergency Expenses.” It is well-intended to allow individuals to withdraw up to $1,000 from their eligible retirement account every three years without the 10% additional tax of IRC §72(t), if the funds are for distributions used for certain emergency expenses, to meet “unforeseeable or immediate financial needs relating to necessary personal or family emergency expenses.” SEC. 115 is on pages 838-839 of P.L. 117-238.

IRC §72(t)(2)(I) covering this additional tax exception is 504 words long and in addition to defining emergency expenses, also provides:

The individual may only make one distribution per year, and it may not exceed the lesser of $1,000 or “an amount equal to the excess of “(I) the individual’s total nonforfeitable accrued benefit under the plan (the individual’s total interest in the plan in the case of an individual retirement plan), determined as of the date of each such distribution, over ‘‘(II) $1,000.”
The plan administrator may rely on employee’s written certification that the exception is met.
The IRS can issue regulations where the employee statement doesn’t apply if the administrator “has actual knowledge” contrary to the certification, and procedures to address cases of employee misrepresentation.
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Join us Thursday July 18th at 10 AM CST for a CPE Webinar on § 174 Updates.

Participants will gain an understanding of the current landscape, legislative updates, and best practices for advising clients on navigating the amortization of § 174 expenses. This course introduces participants to the amortization of specified research and experimental expenditures (SREs) for federal income tax purposes. The relationship of SREs to the research tax credit will be developed. Other TCJA changes to research-related provisions of the Code will also be discussed.

After this course, the practitioner will:
• Identify taxpayers who are required to amortize under § 174
• Identify the types of expenditures that need to be amortized
• Quantify the impact of that amortization as well as identify mitigating factors

We look forward to your participation in this informative session.
Register for CPE Course!

Prerequisites: At least two years preparing intermediately complex business income tax returns. No advance preparation is required.
Recommended Credit: 1.0 hour CPE in the field of Taxes delivered by Group Internet

Attendance Policy: To receive credit, attendees must sign in and be present for the presentation and respond to at least three instances of the attendance monitoring mechanisms per hour of instruction
Refund Policy: Refunds are not issued as this course is complimentary
Eric Larson
(800) 806-7626

eric.larson@sourceadvisors.com

The Supreme Court issued its long-awaited opinion in Connelly v. United States (No. 23-146) on whether a corporation’s obligation to apply the amount of proceeds from corporate-owned life insurance to fund a mandatory redemption of stock on the death of a shareholder reduces the value of the corporate assets (i.e., offsets the insurance proceeds received by the corporation) when valuing the stock in the estate of the deceased shareholder. In a resounding taxpayer defeat by unanimous opinion, the Supreme Court said “no” and resolved a split between the Eighth Circuit in Connelly v. United States, 70 F.4d 412 (2023), and the Eleventh Circuit in Estate of Blount v. Commissioner, 87 TCM 1303 (2004), aff’d in part and rev’d in part, 428 F.3d 1338 (2005).

This fall’s Tax Planning Forum programs will discuss Connelly and a workaround that easily can be implemented in many closely held business situations by using a partnership to own the insurance, rather than the corporation, and thereby not increase the value of a decedent’s stock for estate tax valuation purposes by the corporation’s receipt of insurance proceeds. We will discuss how the partnership should be structured to meet the goals of the shareholders, which mirrors what would have occurred from an economic perspective had the policy been owned by the corporation. We also will delve into how to transfer insurance policies out of a corporation and avoid the impact of the §101(a)(2) transfer-for-value rules that can cause taxation of the life insurance proceeds, if those rules are not carefully navigated. Read More