The Weekly Scenario: IRA Benefits Available to Same-Sex Couples

8/4/15

Steve Shane, Principal

Question: In Light Of The Supreme Court’s Decision In Obergefell, What Are Some Of The IRA Benefits Available To Same-Sex Couples Who Decide To Tie The Knot?

Answer: Now that same-sex marriage is legal in all fifty states, same-sex couples will be able to access IRA tax benefits that were previously available only to opposite sex couples. Here are some (not exhaustive by any means) benefits (lifetime and death) which will now be available to same sex couples.

Lifetime IRA Benefits

1. A working spouse is able to make a contribution to a tradtional IRA and Roth IRA of a non-working spouse in the situation where the non-working spouse might not otherwise be able to contribute to a plan.

2. In the event of a divorce, if an IRA is awarded to the spouse as a result of the divorce, the IRA can be transferred tax free.

3. If spouse is more than 10 years younger than the owner of the IRA, a more favorable life expectancy table may be used for spouse (vs. other IRA owners).

Death Benefits

1. A spouse can complete a ‘spousal’ rollover (not available to any other beneficiary).

2. A spouse beneficiary can use the ‘recalculation’ method for computing minimum required distributions. Doing so results in lower RMDs than those which would otherwise be paid to nonspouse beneficiairies.

3. A spouse may delay the taking of RMDs until the deceased IRA owner would have turned 70 ½. The benefit of the delay is that RMDs might not have to be taken for many years which gives the account more time to accumulate tax deferred.

4. Spouses who have not turned 59 ½ can take distributions from an inherited (spousal) IRA without being subject to the 10% early distribution penalty.

Comment: As shown above, the benefit of marriage has been particularly advantageous in the area of retirement planning.

If you have any questions or would like more information please contact Steve Shane at: sshane@offitkurman.com | 301.575.0313.

ABOUT STEVE SHANE

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

You can also connect with Offit Kurman via Facebook, Twitter, Google+, YouTube, and LinkedIn.

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