NEW IRA DISTRIBUTION RULES

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The SECURE Act is a law that became effective January 1, 2020.  Of importance to IRA owners, and their beneficiaries, is the elimination of what were known as “Stretch IRAs.” 

This law could seriously affect your estate plan.  Before the SECURE Act became law, certain beneficiaries were eligible to stretch their Required Minimum Distributions from certain inherited IRAs over their own life expectancy.  Now, for some IRA’s inherited on or after January 1, 2020, most non-spouse IRA beneficiaries must take their distributions within 10 years.  This means that more income tax will likely be due when distributions are taken.

Beneficiaries who qualify for an exception can take distributions over their life expectancies.  Exception examples are individuals who, at the time of certain IRA owners’ deaths are disabled; are chronically ill; are within 10 years of the deceased IRA owner’s age or those who have not yet reached the age of majority.  Beneficiaries such as estates, charities and certain trusts are still subject to the pre-SECURE Act five-year distribution rule.

We can help you review your IRA beneficiary designations in light of the SECURE Act .