Inheriting An IRA Post-Secure Act

The intention of the SECURE Act of 2019 was to make it easier for Americans to save money in retirement.

The goal of the SECURE Act of 2019 was allowing people to invest more money in tax-advantaged accounts and to withdraw that money later.

Simultaneously, it would make  options and requirements for those who inherit retirement accounts significantly more complicated.

So, what are the changes and how do they affect the inheritors of the post- Secure Act IRAs?

The biggest change affecting inheritors is elimination of the Stretch IRA. This change impacted non-eligible Designated Beneficiaries (non-EDBs).

Prior to the SECURE Act, beneficiaries of inherited retirement accounts were able to ‘stretch’ out distributions. The stretch was based on their own entire life expectancy. Now, most non-spouse beneficiaries will be required to deplete their accounts within ten years after the original owner’s death. This change forces tax-free dollars out of the inherited IRA sooner than previously required. This act reduces ability to let the dollars grow tax-free for longer than 10 years.

The other change is that the Secure Act of 2019 has identified three distinct groups of beneficiaries.

First, there are Non-Designated Beneficiaries – non-person entities such as trusts and charities. Next, you have Eligible Designated Beneficiaries – spouses of account holders. Finally, you have persons who are minors, disabled, chronically ill, or within 10 years of the age of the original account holder.

This new ruling is likely to affect your beneficiaries in a way that you may not like.

You may want to review your estate plan to see if you need to revise it in light of the new requirements under the SECURE Act of 2019. If so, give my office a call at 404-370-0696 and let’s see if we can find a way to let the inheritance grow for your beneficiaries longer than 10 years.

Looking to find an experienced estate lawyer in the Georgia area who is skilled in asset protection and estate plan preparation? Shannon Pawley is an attorney in Georgia with expertise in estate planning and asset protection. Shannon can provide assistance with creating an estate plan to include making a will and how to establish a trust properly. If you have questions about asset protection or questions about making an estate plan, reach out to Shannon and she will be glad to help answer all the estate planning questions you might have!