591/2. "I have a few clients who are currently in the 15% or 28% bracket with $10,000 to 15,000 worth of room within the bracket, and we have done early withdrawals [reducing account corpus] in order to keep the required withdrawals from kicking them up into a higher bracket after 701/2," says the president of Raskob Kambourian Financial Advisors Ltd. Lower MRDs could obviate the need for this strategy.
Although there's nothing advisors can do to have the benefit take effect immediately, post-RBD clients with IRAs at institutions that didn't offer all payout options (and got stuck with a poor one) may be able to get a fresh start. "In the past, a lot of custodians didn't allow the life-expectancy option if the beneficiary wasn't a spouse, but now they're going to be forced to," says Diane Compardo of the St. Louis advisory firm Moneta Group. When your client's laggard institution gets up to speed, that's your chance to plan anew.
Clearly the new regs ring in many glorious changes worth celebrating. But not everything under the sun is new. The law still doesn't shine favorably upon the heirs of those who die young without proper planning. As under the old rules, when an IRA owner dies pre-RBD with no designated beneficiary, whoever ultimately inherits the account must empty it by the end of the fifth year after the year of death.