{"id":11883,"date":"2022-08-18T15:52:13","date_gmt":"2022-08-18T15:52:13","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=11883"},"modified":"2022-08-18T15:52:13","modified_gmt":"2022-08-18T15:52:13","slug":"mitch-looks-at-new-rules-for-inherited-iras","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/mitch-looks-at-new-rules-for-inherited-iras\/","title":{"rendered":"Mitch Looks at New Rules for Inherited IRAs"},"content":{"rendered":"\n

Rosie T. from Springfield, MO asks: <\/em>Hi Mitch, my question isn\u2019t really investment related per se, but I recently inherited my late father\u2019s 401(k) and am kind of frozen as to what the next steps are. Everything I find on the internet is pretty confusing. Any tips or insight you could offer would be appreciated.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thank you for writing, Rosie, and sorry for your recent loss. It\u2019s interesting you pose this question now, because the rules have recently changed with regards to inherited IRAs, and later this year we may see even more adjustments to the final rules.1<\/sup><\/p>\n\n\n\n

The origins of the recent changes to inherited IRAs come from the 2019 Secure Act. In that law, Congress issued a rule that inherited IRAs must be withdrawn fully by beneficiaries over a 10-year period. Prior to the 2019 rule change, beneficiaries could spread distributions out over their entire lifetimes, so this change was significant.<\/p>\n\n\n\n

But there was \u2013 and still is \u2013 confusion over how and when these distributions need to be made. Many CPAs interpreted the IRS rule as saying that heirs could wait until year 10 before making any distributions, but in May 2021 the IRS issued an update stating that heirs would also need to adhere to RMD rules if the deceased had reached RMD age when passing. In short, even tax professionals were confused.<\/p>\n\n\n\n

7 Secrets of Building an Effective
Retirement Portfolio in a Volatile Market<\/a><\/u><\/strong><\/p>\n\n\n\n

Creating the ultimate retirement portfolio, especially during a volatile market, is not an easy task.  To build a portfolio that can potentially reach your goals, you must put time and effort into defining your investing objectives, determining your asset allocation, and managing your investments over time.<\/p>\n\n\n\n

To help you understand how to do this in a volatile market, check out our free guide. You’ll learn the secrets of successful retirement portfolios, including the right way to set your goals and retirement needs, as well as the key basics of disciplined investing, based on our decades of experience.<\/p>\n\n\n\n

If you have $500,000+ to invest, get our free\u00a07 Secrets to Building the Ultimate DIY Retirement Portfolio<\/a><\/strong>2<\/sup> guide today.<\/p>\n\n\n\n

To make it super simple for you, I think the key detail to know is that you have 10 years to withdraw all of the funds in the inherited 401(k). That\u2019s sort of the bottom line here, and how much you can or should take out each year will be clarified later this year by the IRS. So keep an eye out for those details.<\/p>\n\n\n\n

The second key item you should know is that IRA\/401(k) distributions are taxable as ordinary income, so be sure to factor that into your annual tax planning. Your tax bill may be higher this year than it was last year because of these 401(k) distributions, so it could make sense to speak with a tax professional to prepare for the impact.<\/p>\n\n\n\n

Finally, with regard to how you should invest the inherited 401(k), I think it is important to remember that your investment goals are likely much different than your father\u2019s investment goals were when he passed. Having different goals often means a different asset allocation would be appropriate for you, so keep in mind that you do not have to leave the investments in the 401(k) as they are \u2013 you can customize the asset allocation based on your goals and needs. <\/p>\n\n\n\n

During this time of volatility and recession fears, I also recommend reading our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio<\/strong><\/a><\/em>.5 <\/sup>This guide will show you how to create a retirement investment plan that can withstand any market by defining your investment objectives, determining your asset allocation, and managing your investments over time to potentially help you achieve your goals.<\/p>\n\n\n\n

If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process of building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement.<\/p>\n","protected":false},"excerpt":{"rendered":"

IRS rules concerning inherited IRAs were changed in 2019, and there may be additional adjustments coming. Mitch sorts it all out. <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-11883","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"yoast_head":"\nMitch Looks at New Rules for Inherited IRAs - Zacks Investment Management Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/zacksim.com\/blog\/mitch-looks-at-new-rules-for-inherited-iras\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Mitch Looks at New Rules for Inherited IRAs - Zacks Investment Management Blog\" \/>\n<meta property=\"og:description\" content=\"IRS rules concerning inherited IRAs were changed in 2019, and there may be additional adjustments coming. 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