There went yours and my daughter’s Stretch IRA: If you recollect, under the old rules, a beneficiary, an heir, could stretch the required distributions over their lifetime. This had the effect of allowing funds to build over a lifetime with relatively small withdrawals over the heir’s lifetime.
The new rule requires heirs to empty their inherited IRA in 10 years – welcome to a tax increase. Exceptions include spouses, minor children, and heirs who are chronically ill or disabled. If the stretch IRA was part of your estate strategy, we’ll think-up something different: A Charitable Remainder Trust or similar charitable strategy or transferring more assets to a Roth IRA may help, on this later.
If you just turned 70 ½ mandatory distributions now start at 72 and if you are still employed at age 70, IRA contributions are allowed.
On the positive side of the legislation the rules have been simplified and strengthened, in my opinion, to encourage increased 401(k) plan participation by allowing pooled employer plans creating lower cost, more accessible plans. I’ve included a link to the bill if you are interested in the changes to 401(k), 403(b) and 457(b) plans.
The real question for savers, investor and planners is – what’s next? All our efforts to save and protect left at the whim of our congress. And yes, the SECURE bill was attached to the 1,700-page, $1.4 Trillion spending bill. How’s that for irony….?
Our portfolios are fully invested.
Carlos Dominguez – CERTIFIED FINANCIAL PLANNER™, Portfolio Manager, RJFS
Links are provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. The preceding information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Carlos Dominguez and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. Investing always involves risk. Please add: Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.
My-Risk-O-Meter® is a registered trademark of The Dominguez & Jones Wealth Management Group, LLC. #5,675,451