Q1: Why is Wolters Kluwer waiting to update its organizers, booklets, and amendments?
A1: We are waiting to update the organizers, booklets, and amendments because we expect the Treasury/IRS to issue additional regulations soon. We also know the IRS will release the updated Form 5305 series and, even though the timing is uncertain, it could occur this year. And every fall, the IRS releases COLA information for the following year. With all these pending changes, waiting is the most prudent course of action as it helps our customers avoid multiple updates in a single year.
We believe that any potential compliance risk can be mitigated by updating the impacted election of payment by beneficiary forms. Using an election form with the most current options will ensure the elections made are compliant at the time of the election.
Q2: Are my establishment documents (organizers and booklets) non-compliant?
A2: Financial institutions can continue to establish new IRAs using Wolters Kluwer’s current establishment documents (i.e., the booklets and organizers). Any potential compliance risk can be mitigated by using an updated election of payment by beneficiary form. Wolters Kluwer will continue to warrant its most current content.
Q3: Do I need to send another amendment because of these 590-B changes?
A3: After we update our establishment document content, we generally recommend sending an amendment. Before such an update, another amendment is not necessary. Any potential compliance risk can be mitigated by using an updated election of payment by beneficiary form.
Note: The IRS has stated that a required amendment should be sent once the updated Form 5305 series is released. The deadline for sending that amendment is currently December 31, 2022. However, the IRS had stated that the date could potentially be pushed back by rule.
Q4: When will Wolters Kluwer’s revised election of payment by beneficiary documents be available?
A4: We currently expect the impacted preprint and e-form election forms (i.e., the IRA-7-20, IRA-7-20-LAZ, IRACMBEPB-20, and IRACMBEPB20Z) to be updated and available for sale or on the download site by mid-to-late May. However, because of the uncertainty the release caused, the IRS may revise Publication 590-B again. For Expere users, we will make the updated e-forms available for download and use until the content for those solutions is updated and released.
Q5: Is there a workaround available using the currently impacted e-form or preprint versions of the election of payment by beneficiary forms (i.e., Forms IRA-7-20, IRA-7-20-LAZ, IRACMBEPB-20, and IRACMBEPB20Z)?
A5: Yes. Don’t select the 10-year rule for an EDB when the IRA owner has died after his or her RBD (i.e., select the single life expectancy option instead).
Q6: IRS Publication 590-B is not law, could the Treasury/IRS interpretation change once final regulations are issued?
A6: While interpretations like those found in IRS Publication 590-B are always subject to change, the chances are low. In this case, many in the industry were caught off guard by the interpretation, making the chances slightly higher that the Treasury/IRS could change its position. However, the interpretation currently stated in IRS Publication 590-B is the best insight available into current Treasury/IRS thinking. We will know more once final regulations are issued.
Q7: Who is a designated beneficiary?
A7: Generally, a designated beneficiary is any individual named as a beneficiary by the IRA owner.
Q8: Who is an eligible designated beneficiary?
A8: An IRA beneficiary is an eligible designated beneficiary if the beneficiary is the owner's surviving spouse, the owner's minor child, a disabled individual, a chronically ill individual, or any other individual who is not more than 10 years younger than the IRA owner.
If you have questions on this change, please contact our support team at [email protected] or 1-800-397-2341, option 3.