Revisiting the SECURE Act: Inherited IRAs

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The Story:

Have you heard of inherited IRAs? The SECURE Act changed a lot of rules, including the details surrounding the inherited IRAs, so you’ll want to know how to plan accordingly.

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The Show:

When it comes to the SECURE Act, there were many new changes, including changes related to inherited IRAs. If you are a Baby Boomer, you may not have much experience with an inherited IRA, because previously people had a pension and less money in an IRA that got passed down.

As of January 2020, the SECURE Act changed the rules on inherited IRAs. On this episode of Your Money, Your Life we talk about what stretch IRAs used to look like as well as what the new rules are for inherited IRAs under the SECURE Act. For starters, the required minimum distributions (RMDs) on inherited IRAs will look quite a bit different.

Instead of a required annual distribution throughout your life like in a stretch IRA, there is now a ten-year timeline to withdraw all of the funds. But wait, there’s more! This ten-year rule doesn’t apply to all beneficiaries–there are five classes of eligible designated beneficiaries who are exempt from this new rule.

While it might sound complicated, once you understand the rules you can plan around the changes. If you have questions or concerns, be sure to meet with a financial advisor to clear up any confusion and get some clarity on these new rules.

In the Cash Connection, Jerry in Monroe keeps hearing that Roth IRAs are better than traditional IRAs but is confused by the contribution limits and rules. Don explains some of the contribution limits, income limits, and benefits when it comes to Roth IRAs.

Listen to the entire episode or click on the timestamps below to hear more regarding a specific subject.

[1:27] – How has the SECURE Act changed things for us?

[3:51] – How have inherited IRAs changed?

[7:32] – Are there RMDs in the new rule?

[9:26] – Which beneficiaries are exempt from this rule?

[10:15] – If you listed a trust as your IRA beneficiary, you’ll want to revisit that with an estate planning attorney. 

[12:09] – Cash Connection: What are the contribution limits and rules for a Roth IRA?

[17:42] – Getting to Know You: What is special about where Don grew up?

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About Don:

Donald W. Cash – CPA, CFP® is an independent advisor. Don began his career in 1985 as an accountant after graduating Rutgers University. In 1990 he entered the field of Estate Planning with a concentration in long term care planning. Don has been advising clients in the baby boomer and retirement market for 20 years. He has helped over 1,000 families with their planning needs. He advoctaes a holistic approach to Estate and Financial Planning as has relationships with other professionals including Attorneys, CPA’s, Mortgage Specialists, Insurance Specialists and Asset Managers. Don is married to Cathy and have 4 children, Carly, DJ, Nick and Tori. They live in Freehold, NJ.

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