Wills, Trusts & Estates: Plain and Simple – New Retirement Account Rules: Should You Re-Visit Your Estate Planning Documents?

March 16, 2020

Under the SECURE act, which was passed by Congress just before Christmas, the new starting age to take Required Minimum Distributions (“RMD’s”) from tax-deferred retirement accounts (exs. an IRA, a 401(k), hereinafter “IRAs” for ease of reading) is now the year after you turn 72, up from 70 1/2. Also, you can continue to contribute to your IRA as long as you like, as long as you are still working.

The big news on the estate planning front is the elimination of “stretch” IRAs for most non-spouse beneficiaries. Most non-spouse beneficiaries must now withdraw the entire assets of the IRA within ten years of the plan participant’s death. Previously, they could spread out the payments over the beneficiary’s lifetime. The assets can be taken in installments over the 10 year period, or the beneficiary can wait until the end of the 10 year period and withdraw the assets in full at that time. Whenever the distributions are taken by the beneficiary, she will have to pay income taxes on the withdrawals made in that year.

Reprinted with permission from Lloyd Harbor Life, March 2020. 

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