The ‘Stretch’ may be gone, but that doesn’t mean you can’t achieve the same wealth transfer effects as before. Learn about this one trick that offsets the tax burden to Inherited IRA non-spouse beneficiaries!

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The Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed in December 2019, brought significant changes to retirement planning. One of the most significant changes of the SECURE Act was the required minimum distribution (RMD) age for Individual Retirement Accounts (IRAs) and other qualified retirement plans being shifted from 70 ½ to 72. This change allows for a more extended period for the account growth and tax deferment, but it also requires an additional two years of savings before RMDs start.

Despite these changes, it’s still important to preserve your IRA to ensure you have enough money to last throughout your retirement. Here are a few strategies to consider:

1. Maintain a strategic distribution plan: Even if the RMD age increased to 72, it’s still essential to develop a strategy for your distributions. According to the new law, the penalty for not taking a distribution on time is now 50% of the missed RMD amount.

2. Use Qualified Charitable Distributions (QCDs): QCDs are the most tax-efficient way for individuals to give money to charity over the age of 70 ½. QCDs satisfy the RMD requirement and up to $100,000 can be donated each year, which can help reduce your tax bill while providing necessary funds for your chosen charity.

3. Review your estate plan: With the SECURE Act, most IRA heirs will need to withdraw the entire IRA within ten years of the original account holder’s death. This change will impact estate planning and the distribution of assets after the primary account holder passes away. Reviewing and updating your estate plan is crucial to ensure that your assets are distributed according to your wishes.

4. Consider a Roth Conversion: If you’re concerned about the ten-year rule impacting your heirs, consider a Roth Conversion. Converting a traditional IRA to a Roth IRA now can result in tax-free withdrawals for your heirs in the future.

5. Re-evaluate your retirement plan: With the RMD age raised to 72, you might have extra time to funnel additional assets into your IRA account. Re-evaluating your retirement plan and increasing your contributions to your IRA can help ensure you have the funds you need in retirement.

In conclusion, while the SECURE Act has significant implications for retirement planning, it’s still crucial to preserve your IRA. Discussing these strategies with a financial professional can help you develop a comprehensive plan that works best for your financial goals and lifestyle. Remember, sticking to an IRA preservation plan will help ensure a comfortable retirement, no matter what changes the future holds.