The IRS has confirmed that new rules for inherited IRAs, set by the 2019 Secure Act, will be enforced. These rules end the "stretch" IRA strategy for most beneficiaries, requiring them to withdraw all assets within 10 years of inheritance.
Matthew Cleary suggests a strategic approach may be needed to help manage the tax burden that could result from the 10-year distribution requirement. He suggests that clients might find it beneficial to set up a structured withdrawal schedule to spread out the tax impact, rather than taking all distributions in one year. Converting traditional IRAs to Roth IRAs might be a strategy to consider, Matthew notes.
“They would still be subject to the 10-year rule, but then they don't necessarily have the tax issue,” he said. “It’s an idea for the right person who’s able to pay those taxes up front.”
Interested in learning more? Check out the full Financial Planning article here.
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