Happy Blessed Monday Beautiful Women Supporting Women,
I hope you had an amazing weekend. I spent my time with my clients at a Social Security event, where we learned about how to maximize benefits if we’re married, single, divorced or widowed. On Sunday, I thanked God for waking me up and for my Mother’s continued healing. She is getting stronger and stronger every single day. If you have a parent that is still alive and well, please make sure you let them know how much you love them. It can give them the extra motivation they need to keep going.
Last week, we spoke about the changes in the 529 College Plan via the SECURE Act. This week, we will discuss something called the Stretch IRA.
What Is A Stretch IRA?
A Stretch IRA was an estate planning strategy that applied to an IRAs inherited by a non-spouse beneficiary. By using the stretch strategy, an Individual Retirement Account (IRA) could be passed on from generation to generation, taking advantage of tax-deferred and/or tax-free growth of the assets within it.
With the SECURE Act, the feature of passing on the IRA from generation to generation and deferring taxes for as long as you could is now a thing of the past. For deaths occurring on and after January 1, 2020, the SECURE Act requires that non-eligible designated beneficiaries of an IRA withdraw the entire balance within 10 years from the end of the year of the IRA owner’s death. Eligible beneficiaries may continue to stretch payments over their life or life expectancy. Eligible beneficiaries include spouses, minor children (until they reach the age of majority at which point the 10-year rule applies), someone who is disabled or chronically ill (including certain trusts for the disabled/chronically ill), or an individual not more than 10 years younger than the IRA owner. The determination of whether a designated beneficiary is an eligible beneficiary is made as of the date of the IRA owner’s death. The new rule is applicable to IRA owner deaths that occur after 12/31/19.
Make sure you are mindful of who is listed as a beneficiary(ies) on your IRAs going forward.
If you have any additional questions or comments, please post here or email me at:
Next Up: Safe Harbor Liability Provisions
As always, thank you for reading.
Have a beautiful and blessed week!
Changing the lives in our community….one family at a time