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RMD relief for IRAs offers tax planning opportunities

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2 years ago

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Financial advisors, tax professionals and their clients who inherited individual retirement accounts in this year or the previous three received 12 more months of flexibility from the IRS.

In an April 16 notice, the agency and the Treasury Department tacked on at least one more year without required minimum distributions for IRA and annuity beneficiaries who must transfer the full amount into their income for federal tax purposes within a decade under the terms of the 2019 Secure Act, rather than using the previously available lifetime “stretch” strategy. The “welcome news” for heirs provides more time “for additional growth and compounding without the burden of taxes,” Allen Laufer, the director of financial planning for New York-based registered investment advisory firm Silvercrest Asset Management Group, noted in an email.

READ MORE: With Congress slow to act, financial advisors plan ahead on estate taxes

For planners and clients seeking to reduce potential estate taxes and RMD headaches down the line, that extra year of relief also creates an opportunity to consider trust strategies that could address both issues at once, according to Laufer and Theresa de Leon, the national director of sales for Arden Trust, a Kestra Holdings company. 

The notice represents “the final regulations” that “will apply for purposes of determining RMDs for calendar years beginning on or after Jan. 1, 2025,” the IRS said in the notice itself. In the meantime, heirs and their tax professionals can think through the potential timing and bracket impact of inheriting the assets amid the potential sunsetting of the lower individual rates of the 2017 Tax Cuts and Jobs Act in 2026, Laufer said. 

“If they’re currently in a low tax bracket but anticipate moving to a higher one later, it might make sense to capture taxable income in the lower bracket year,” he said. “Let’s not forget that the IRA must distribute all its assets within the 10-year period. By deferring distributions, subsequent year distributions may be larger and push individuals into a higher tax bracket.”

Since “retirement accounts are always an important part of planning” for an estate transfer, placing the IRA in a trust could be “the easiest and simplest way” for an owner to lessen the taxes and RMDs for heirs in the future, de Leon noted in an interview.

“You never want to go to a client with the answer before you ask all of the questions — that’s kind of the mantra that I live by. You have to take the step back and understand your client and what your client’s objectives are,” she said. “You can really get some of the trusts out of the estate, so that you don’t have that first bite of the apple of the estate tax.”

READ MORE: How a life insurance strategy could save some wealthy estates millions

Estate taxes, the sunset date of many Tax Cuts and Jobs Act provisions and RMDs under the Secure Act have emerged as three complicated prongs of related planning questions that could occupy planners and their clients for several years. Just as it did the last time the IRS pushed back the beginning of RMDs this past summer, the question remains whether the agency will do so again next year. 

The wording in the IRS notice that the Secure Act rules “will apply” on or after the beginning of 2025 displays a notable difference with the ones bringing that relief in prior years by stating that the RMDs would have to begin “no earlier than the subsequent” year, certified public accountant Ed Zollars wrote on Kaplan Financial Education’s “Current Federal Tax Developments” blog.

“Such omissions have historically left the applicability of penalties in the following year ambiguous, with the IRS not specifying its expectations regarding the enforcement of these rules for distributions in that year,” Zollars wrote. “And, in fact, such penalties have not applied in those subsequent years. Instead, the current notice indicates that the final regulations are projected to be applicable for determining required minimum distributions for calendar years starting from January 1, 2025. Consequently, it is prudent for taxpayers to operate under the assumption that distributions are likely to be mandated for the tax year 2025 and beyond.”

In light of the eventual implementation of the 10-year distribution rules, IRA owners and their tax professionals could set up a charitable remainder trust (CRT) to be the beneficiary, Laufer said. That strategy comes with its own guidelines, such as restricting the annual payouts to heirs to between 5% and 50% of the trust’s value and other specific qualifications, he noted. 

“A CRT is a tax-exempt entity that can distribute an annuity based on a percentage of the annual fair-market value of the trust assets,” Laufer said. “The beneficiary of the CRT would retain the right to receive an annuity expressed as a percentage of the annual fair-market value of the trust’s assets. This annual annuity can be paid to individual beneficiaries for life or for a term up to 20 years. At the end of the CRT term any remaining trust property will pass to the designated qualified charitable beneficiaries.”

READ MORE: 26 tips on expiring Tax Cuts and Jobs Act provisions to review before 2026

The many family dynamics involved with estate planning often bring other factors into the mix around a decision about placing the assets in a trust, de Leon noted. Those may include the relative financial sophistication and well-being of one heir as compared to another, protecting assets in the event of a divorce or even concerns about substance abuse problems, she said.

“It’s really those kinds of issues — those emotional issues — that tend to lead people to trusts,” she said. “Those tend to be more the rationale for people these days. More of my conversations are about that than the tax consequences, frankly.”

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Global ESG Reporting Standards and Double Materiality Compliance

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6 days ago

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August 9, 2026

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Corporate accounting departments face expanding reporting expectations as international sustainability disclosure standards achieve regulatory enforcement across major global jurisdictions. Chief Accounting Officers (CAOs) and corporate controllers are establishing rigorous internal accounting controls to treat Environmental, Social, and Governance (ESG) metrics with the same data precision, auditability, and governance as traditional financial statements.

Regulatory Harmonization Under Global Sustainability Frameworks
The implementation of standardized sustainability reporting frameworks—notably rules established by international sustainability accounting boards—has created unified expectations for public and large private enterprises. Corporations must report standardized metrics covering greenhouse gas emissions (Scope 1, 2, and material Scope 3), energy utilization, workforce demographics, and supply chain governance.

In Europe and other participating international jurisdictions, double materiality principles are mandatory. Under double materiality, organizations must report both how external sustainability risks impact corporate financial performance, and how internal corporate operations affect surrounding environmental and social structures.

Integrating Sustainability Metrics into Core ERP Systems
To provide auditable non-financial data, enterprise organizations are integrating specialized carbon accounting and ESG management platforms directly into core ERP systems. Automated data collectors capture energy utility invoices, logistics fuel consumption metrics, and vendor compliance records in real time.

Establishing automated, traceable data pipelines ensures that non-financial reporting is supported by clear audit trails. This structured approach allows external financial auditors to provide reasonable assurance on sustainability disclosures during annual corporate reporting cycles.

Financial Impacts and Capital Market Disclosure
Accurate ESG reporting directly influences corporate cost of capital and institutional credit ratings. Commercial lenders and institutional asset managers systematically incorporate sustainability metrics into risk pricing models. Companies that demonstrate transparent, verifiable progress in operational energy efficiency and climate risk mitigation benefit from expanded access to green bond markets and lower debt pricing.

Action Steps for Accounting Leadership
1. Implement Double Materiality Frameworks: Conduct comprehensive assessments to identify material financial and operational sustainability metrics.
2. Build Auditable Non-Financial Data Pipelines: Automate ESG data collection within core accounting software to ensure data integrity.
3. Align Sustainability with Annual Financial Filings: Prepare non-financial disclosures concurrently with financial statements to satisfy regulatory audit expectations.

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Modernizing Internal Controls: Machine Learning and Continuous Monitoring in Auditing

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1 week ago

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August 5, 2026

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Internal audit departments and corporate risk managers are modernizing internal control frameworks by shifting from periodic sampling techniques to continuous monitoring and machine learning analytics. As operational data volumes increase across enterprise organizations, automated control testing ensures financial integrity, prevents corporate fraud, and streamlines annual audit engagements.

The Limitation of Periodic Audit Sampling
Historically, internal and external auditors evaluated internal controls by reviewing random samples of financial transactions—often analyzing less than five percent of total ledger entries. In complex enterprise environments, periodic sampling methods carry inherent risks of overlooking localized financial misstatements, unauthorized disbursements, or operational control breakdowns.

In 2026, progressive internal audit functions are utilizing automated continuous monitoring platforms that evaluate one hundred percent of financial transactions in real time. Continuous control auditing systems continuously monitor general ledger entries, procurement approvals, and expense reimbursements across all operating subsidiaries.

AI-Powered Fraud Detection and Anomaly Identification
Machine learning models trained on historical corporate financial data excel at identifying subtle transactional anomalies that indicate potential fraud or operational error. Automated systems instantly flag duplicate invoice payments, unapproved vendor creation, unusual journal entry timing, and unauthorized override of authority thresholds.

When an anomaly is detected, the automated auditing platform generates an instant risk alert, allowing internal audit teams to investigate root causes immediately. Early detection prevents minor operational errors from escalating into material weaknesses in financial reporting.

Streamlining External Audit Preparation
Continuous internal control monitoring delivers significant benefits during annual external financial audits. External audit firms can review continuous audit logs and automated control testing documentation, reducing the time required for manual field testing.

This integrated approach lowers overall audit compliance fees, reduces administrative burdens on corporate accounting staff, and provides senior management and audit committees with real-time visibility into the organization’s overall risk profile.

Core Implementation Guidelines
1. Transition to 100% Data Testing: Replace legacy sampling methods with automated continuous audit monitoring systems.
2. Deploy Anomaly Detection Algorithms: Implement machine learning models to identify unauthorized transactions and operational control overrides.
3. Align Internal and External Audit Workflows: Coordinate continuous control testing protocols with external auditors to optimize annual compliance cycles.

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Automated Tax Compliance and Global Regulatory Harmonization in 2026

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1 week ago

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August 5, 2026

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Corporate tax accounting departments are navigating an era of unprecedented regulatory complexity as global tax harmonization frameworks take full effect alongside real-time digital tax reporting mandates. Tax directors and accounting teams are adopting cloud-based tax compliance automation tools to manage multi-jurisdictional tax liabilities and satisfy stringent reporting rules across international jurisdictions.

Implementation of Global Minimum Tax Provisions
The implementation of international tax reform agreements—notably the Pillar Two global minimum tax framework—has reshaped multinational corporate tax planning. Multinational enterprises with consolidated revenues exceeding established thresholds must ensure an effective tax rate of at least 15% across every jurisdiction in which they operate.

Accounting teams are implementing specialized tax calculation modules integrated directly into enterprise resource planning (ERP) platforms. These automated tools calculate effective tax rates per country, identify top-up tax liabilities, and generate standardized compliance documentation required by national tax authorities.

Real-Time Digital Invoicing and E-Reporting Mandates
Tax authorities across Europe, Latin America, and Asia-Pacific have enacted mandatory electronic invoicing (e-invoicing) and continuous transaction controls (CTC). Under these systems, corporate transaction data must be submitted electronically to government portals in real time at the point of sale or invoice issuance.

This shift toward continuous digital tax reporting eliminates traditional annual tax audits in favor of ongoing automated compliance monitoring. Accounting departments are upgrading invoicing software to ensure seamless XML data formatting, digital signature authentication, and real-time validation against tax authority databases.

Automation and Data Analytics in Corporate Tax Strategy
To keep pace with dynamic tax legislation, tax departments are transitioning from reactive compliance teams to proactive strategic advisors. Machine learning algorithms analyze corporate transactional data to identify tax credits, research and development (R&D) incentives, and cross-border transfer pricing adjustments.

By automating routine tax return filings and calculations, corporate tax directors can focus on long-term capital structuring, evaluating the tax implications of corporate mergers, and optimizing international supply chain networks.

Strategic Priorities for Tax Executives
1. ERP System Upgrades: Ensure enterprise software is capable of generating real-time, granular tax data required for global minimum tax compliance.
2. E-Invoicing Integration: Implement scalable e-invoicing platforms to satisfy regional continuous transaction control regulations.
3. Strategic Tax Analytics: Utilize predictive tax modeling tools to evaluate structural changes in corporate operations and cross-border trade.

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