Have you recently inherited an IRA from a parent or someone other than your spouse? Maybe you expect to in the future. There have been some recent developments regarding the SECURE Act that you should be aware of. Senior Wealth Advisor, Blaine Carr breaks it down in Part 2 of our SECURE Act 2.0 series….(read more)

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With the passage of the SECURE Act 2.0, there are now important changes to consider when inheriting an IRA. The SECURE Act 2.0 is a piece of legislation aimed at making it easier for people to save for retirement. It includes provisions that allow for more flexibility when it comes to inheriting an IRA.

The most important change is that the required minimum distribution (RMD) age has been increased from 70.5 to 72. This means that if you inherit an IRA from someone who passed away after December 31, 2019, you will not have to take a RMD until you reach the age of 72. This is a significant change, as it allows the funds to remain in the account longer, allowing for more time for the funds to grow.

Another important change is that the stretch IRA has been eliminated. This was a popular option that allowed beneficiaries to stretch out the distributions from an inherited IRA over their lifetime. Now, the entire balance of the IRA must be distributed within 10 years of the original account holder’s death. This means that beneficiaries must be mindful of the tax implications of taking large distributions in a short period of time.

The SECURE Act 2.0 also includes provisions that allow for more flexibility when it comes to who can inherit an IRA. Under the new legislation, certain family members, such as siblings, nieces, and nephews, can now inherit an IRA. This is a significant change, as it allows for more people to benefit from the funds in an IRA.

Finally, the SECURE Act 2.0 includes provisions that allow for more flexibility when it comes to how the funds in an inherited IRA can be used. Beneficiaries can now use the funds for a variety of expenses, including higher education, a first home purchase, and qualified medical expenses. This is a significant change, as it allows beneficiaries to use the funds in a way that best suits their needs.

Inheriting an IRA can be a complex process, and the passage of the SECURE Act 2.0 has made it even more so. It is important to understand the new rules and regulations that have been put in place so that you can make the most of the funds in an inherited IRA. With careful planning, you can ensure that the funds are used in the most beneficial way possible.