In this week’s podcast, Russ Kinnel shines a light on three struggling Gold-rated funds, Ed Slott tells us the new rules about inherited Roth IRAs, Christine Benz assigns us an important to-do for September, and Ben Johnson explains what’s been going on with ARK Innovation ETF….(read more)

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Investing Insights: Struggling Funds and Stretch IRA Updates

Investment in mutual funds has long been a popular choice for individuals who are seeking to grow their wealth over time. However, not every fund out there has delivered expected returns for investors. Some funds have been struggling to perform, and investors need to pay attention to these struggling funds and their respective managers to make informed decisions.

Investors should not ignore struggling funds, even if they appear to have good results currently or have been performing well in the past. Many times, funds can fall out of favor due to changes in the financial markets, increased competition or changes within the fund manager’s team. It is essential to be analytical when reviewing a fund’s performance and track record to look beyond the surface level of fund results.

Another important update is about how distributions and withdrawals from individual retirement accounts (IRAs) are impacted by new regulations in 2021. The Secure Act, signed into law in December 2019, introduced changes to the legal requirements regarding inherited IRAs, significantly affecting beneficiaries such as children, spouses, and non-spouses. This change could have a significant impact on the distribution strategy for Americans who have inherited IRA accounts, as some of the previous options have been restricted.

A considerable change from this act is regarding Stretch IRAs. Before the Secure Act, individuals could spread out IRA withdrawals over their lifetimes, allowing them to reduce their tax burden. However, the new law mandates that non-spousal beneficiaries must withdraw the entire inherited IRA within ten years of the account owner passing away. This change may provide immediate tax benefits to the government, but it can lead to financial difficulties for people inheriting IRAs, impacting the beneficiary’s tax situation, financial goals, and wealth planning.

In conclusion, investors should be mindful of struggling funds and make informed decisions that will benefit their financial goals. It’s essential to review the financial situation regularly and any updated regulations concerning financial instruments such as IRAs. The investment world is ever-changing, and investors should be updated about changes in regulations to switch investment strategies accordingly.