Take notice of the recent repeal of Stretch IRAs. On December 19, 2019, Congress approved a $1.4 trillion appropriations bill that included significant changes to the way IRAs and qualified plans will be administered, effective on January 1, 2020.
Two of the changes are to eliminate the maximum age at which an individual can make contributions to a traditional IRA and delay the starting date for required minimum distributions from age 70½ to 72. The most significant changes, however, relate to required minimum distributions from inherited retirement plans and IRAs.
For account owners dying after 2019, the repeal of stretch IRAs creates a new category of designated beneficiaries known as “eligible designated beneficiaries.” For eligible designated beneficiaries and non-designated beneficiaries, the law has not changed, except that the payout for minors is 10 years from attaining majority.
For any other designated beneficiary, the payment period from an inherited IRA or plan may not exceed 10 years from the death of the participant. As a result, in some cases, the best result of the elimination of stretch IRAs will be to avoid designated beneficiary status. These changes will significantly impact estate planning for retirement benefits.
Any good plan for the financial security of your family during retirement includes a mix of saving vehicles including both life insurance and proper IRAs. Professionals at The Ziff Agency are prepared to take a look at your over-all planning to offer our best advice. You can contact us here.
(Source: Lexology)