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Rules Tighten on Stretch IRAs

Rules Tighten on Stretch IRAs

| February 10, 2020
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Washington was busy this holiday season. As many of us were looking forward to some well-earned time off, new legislation was passed, and it affects some of the old rules for traditional Individual Retirement Accounts. These changes went into effect on January 1, 2020.

One of the biggest changes will affect the required minimum distribution (RMD) timeline for IRAs granted to a beneficiary at the time of your death.

So, what does this mean for you?

Unless an inherited IRA meets a very specific set of circumstances, non-spousal beneficiary is now required to withdraw the money from the IRA within a period of 10 years.

For example, let’s say that you have a hypothetical $1 million IRA. The beneficiary is not required to take a set amount. The requirement is the money must be withdrawn by the end of the 10th year following the year of inheritance. So, if you are leaving your IRA to a 50-year-old child, they must take all the money by the time they reach age 61. In the past, your 50-year-old child could stretch the money over their expected lifetime, or roughly 30 years.

The new limits on IRAs may force account owners to reconsider inheritance strategies and review how the accelerated income may affect a beneficiary’s tax situation.

Individual situations may change and vary. I’m here for you to talk about how this new law changes your retirement strategy. Give me a call, so we can find some quality time to discuss this, and in the meantime, we’ll be keeping a close watch on any other pending changes.

Contact me with questions or concerns.

Robert J. Tuzzo, CLU®, ChFC®, MSFS

Total Financial Concepts, Inc

106 Apple Street Suite 204

Tinton Falls, NJ 07724

Phone: 732-225-7404

Disclosure: This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Compliance Note: A5AL-JAN22

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