The Secure Act was signed into law on December 20, 2019, and it could change the treatment of your pre-tax retirement accounts. The Act eliminates “Stretch IRA’s.”
Hiers who inherited traditional IRA’s could stretch the IRA Required Minimum Distributions over their lifetime. For example, if a grandfather leaves his traditional IRA to his 25 year-old grandchild, the grandchild could stretch the Required Minium Distributions over his or her lifetime, reducing the tax liability faced from those earnings – ergo the “Stretch IRA.”
The Secure Act requires that the inherited IRA be paid out fully within ten (10) years of the original account holder’s death. The law could affect your estate plan. If you have questions, you should give us a call to see if we can assist you in all of your estate planning needs.