Compliance December 20, 2024

“Shadow SEC” Group Aims to Shape Discussions on Federal Securities Laws

A group of academics created the group to seek the “wisest possible federal securities laws and policies,” and backed Trump’s pick for SEC Chair.

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A new academic group named the “Shadow SEC” announced its formation this week.

The organization made up of six legal and business academics aims to provide, encourage, facilitate and distribute policy discussions related to U.S. securities laws and matters involving the Securities and Exchange Commission, the Shadow SEC group said in a statement.

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“Our intention is to meet regularly and provide thoughtful commentary based on history, economics, market practices, and SEC law,” the group said in a statement. 

The founding members are all university professors and include John Coates, professor of law and economics at Harvard Law School, John C. Coffee, Jr., professor of law at Columbia Law School, James Cox, professor of law at Duke University School of Law, Jill Fisch, professor of business law at the University of Pennsylvania Law School, Merritt Fox, professor of law at Columbia Law School, and Joel Seligman, dean emeritus and professor at Washington University School of Law

“Our purpose is to provide advice on how best to improve securities markets and preserve and fortify the SEC, which throughout its 90-year history has demonstrated a remarkable ability to adjust – through statutory changes, rulemaking, and enforcement actions – to constantly evolving securities products and securities markets and broker-dealer, investment adviser, governance, and accounting practices,” the group wrote in the statement.

The organization said it plans to announce one or two more members this month; and seeks to include others in “seeking the wisest possible federal securities laws and policies.”

They also backed President-elect Donal Trump’s nomination of Paul Atkins to chair the SEC. If approved by the Senate, he is expected to have a less aggressive regulatory regime than his recent predecessors and is also notable for his push to advance cryptocurrency guidelines and use in the markets.

“As an initial statement, we congratulate Paul Atkins on his nomination to be the next SEC chair. Paul earlier served as an SEC commissioner and has worked at the SEC during both Democratic and Republican administrations,” the group wrote. “We recognize that he has the requisite experience, knowledge, and intelligence for the position. We reserve the right to disagree with policies that he may propose.”

Client Service December 20, 2024

What to Know About the 10-Year Inherited IRA Rule

A tax specialist unpacks the end of the ‘stretch’ IRA brought in by SECURE 2.0.

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Starting in 2025, people with inherited individual retirement accounts will no longer be able to “stretch” their withdrawals for as long as they want.

The new regulation, known as the 10-year rule, has been delayed by the IRS previously, but is finally here next month. Anyone who inherited an IRA from someone who died on or after January 1, 2020, will be required to withdraw all funds by December 31 of the 10th full calendar year following the decedent’s death. 

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While the regulation is going into effect in 2025, it is an important area for IRA inheritors to be aware of and, ideally, get some guidance on how to best manage their withdrawals, says Mark Gallegos, a certified public accountant and tax partner in Porte Brown LLC.

“Beneficiaries used to be able to stick to just the annual required minimum distribution and stretch the IRA out potentially for decades,” Gallegos says. “Now they need to consider how to best draw it down within the 10-year time limit.”

There are exceptions to the 10-year rule, including: surviving spouses; a child of the decendent under the age of 21; a beneficiary who is not more than 10 years younger than the decedent; and an individual who is disabled or chronically ill.

For those who are affected, the financial results of that decision can be significant, Gallegos says. If a beneficiary takes out too much during a given year, it may bump them into a higher income bracket and cause them to pay more taxes. But if they wait until the end of the 10-year period to take out the entire amount, they may face a “tax bomb.”

“Sometimes it makes sense, for someone making a good income, to stick to the [required minimum distribution] for a few years,” Gallegos says. “Then, if they are going into retirement and have less income, they can up the withdrawals.”

Gallegos calls the strategy “tax bracket management,” and because he advises on the tax side of things, he recommends that people work with a financial adviser to consider their full picture.

“With my clients, I always say, ‘Let’s talk to your financial adviser,’” he says. “We look at cash flow and calculate the tax effect—usually people just use the cash flow that makes the most sense.”

If beneficiaries do not make the withdrawal by the due date, the amount not withdrawn may be subject to an excise tax of 25%—or 10% if it is withdrawn within two years.

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