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The Secure Act changes the way people will inherit money ‐ are you affected by the new rules?
[Market Watch] The Secure Act, which was signed earlier this month, changes the way beneficiaries will receive money from inherited retirement accounts, but not everyone is in danger of a big tax hit.The new rules say beneficiaries of qualified retirement accounts, such as individual retirement accounts and 401(k) plans, need to withdraw all of the money out of those accounts within 10 years, instead of over their life expectancy as was previously allowed. There are no required minimum distributions within that time frame, but the account balance must be zero after the 10th year. Stretching the withdrawals over the beneficiary’s life expectancy ‐ the so-called stretch IRA provision ‐ meant paying less in taxes, whereas the new rule threatens to result in higher tax bills, especially if the inheritor is in her peak earning years. Required minimum distribution calculations are based on numerous factors, including beneficiary’s age, life expectancy and the account balance. Posted by: Besoeker 2019-12-29 |
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