{"id":9721,"date":"2021-07-15T16:58:04","date_gmt":"2021-07-15T16:58:04","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9721"},"modified":"2022-02-26T13:05:37","modified_gmt":"2022-02-26T13:05:37","slug":"what-are-the-new-rules-for-inherited-iras","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/what-are-the-new-rules-for-inherited-iras\/","title":{"rendered":"What Are the New Rules for Inherited IRAs?"},"content":{"rendered":"\n<p><em>Heidi G. from\nBellingham, WA asks: <\/em>Hello from the Pacific Northwest, Mitch. I\u2019m working\non my estate plan and intend to leave my IRA to my adult children. I \u2018think\u2019\nnew rules are determining what my kids need to do once they inherit the IRA,\nbut I have not been able to confirm. Do you have information on this?<\/p>\n\n\n\n<p><strong>Mitch\u2019s Response: <\/strong><\/p>\n\n\n\n<p>Thanks for writing, Heidi. I do know what you\u2019re referring\nto \u2013 it\u2019s a new rule regarding IRAs that is part of the broader 2020 Setting\nEvery Community Up for Retirement Enhancement (SECURE) Act. The new rules mark\na big change to the way IRAs can be inherited, and as might be expected,\nthey\u2019re slightly confusing. <\/p>\n\n\n\n<p>The basic premise of the new rule is as follows: when an\nadult beneficiary (child, grandchild, other non-spouse) inherits an IRA, they\nhave 10 years from the date of the IRA owner\u2019s passing to withdraw all of the\nassets. Before the recent rule change, folks were confused about how those\nwithdrawals needed to be made. Did you have to withdraw a certain amount each\nyear? 10 equal installments? Etc.<sup>1<\/sup><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_07_15&amp;content=volatility_can_be_good_guide\">Use Market Volatility to Your Advantage!<\/a><\/strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_07_15&amp;content=volatility_can_be_good_guide\"><br><\/a> \u00a0<br>Ups and downs in the market can be very challenging to manage. But, even when your uncertainty levels are high, do you know that volatility may have useful, hidden benefits to better navigate your investing decisions? <br><\/p>\n\n\n\n<p>If you have $500,000 or more to invest, get our free guide, <em>\u201cUsing Market Volatility to Your Advantage,\u201d<\/em> and learn our insights, based on decades of experience, about how a volatile market may be able to help investors refine their strategies and potentially generate solid returns over time.<br> \u00a0<br> You\u2019ll get our ideas on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>How market volatility can \u201cshake up\u201d complacent investors<\/li><li>Potential bargains that may be uncovered through turbulence<\/li><li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li><li>What history shows us about opportunities for steady investors in turbulent markets<\/li><li>Plus, more ways you may be able to benefit from a volatile market<\/li><\/ul>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_07_15&amp;content=volatility_can_be_good_guide\">Download Our Guide, \u201cUsing Market Volatility to Your Advantage\u201d<\/a><sup><a href=\"https:\/\/go.steadyinvestor.com\/arrow-use-volatility-to-your-advantage?source=zim&amp;medium=blog&amp;term=mitchsmailbox_zim_2021_07_15&amp;content=volatility_can_be_good_guide\">2<\/a><\/sup><\/strong><\/p>\n\n\n\n<p>_________________________________________________________________________<\/p>\n\n\n\n<p>The IRS clarified the rule in May, stating that beneficiaries\nwho inherit IRAs could make the withdrawals in whatever manner they wished, as\nlong as all of the assets were withdrawn \u2013 and taxed \u2013 within the 10-year\nperiod. For example, if an IRA owner passed away on January 15, 2020, the\nbeneficiary has until January 15, 2030, to withdraw the assets. He or she could\ntake equal installments each year, a massive withdrawal right away, half in\nyear 5 and half in year 10, really any strategy as long as the 10-year rule is\nmet. <\/p>\n\n\n\n<p>Every beneficiary\u2019s situation is different, of course. But\nin my view, it could make sense for the beneficiary to wait as long as possible\nto withdraw the assets, to take advantage of 10 years of tax-deferred growth. But\nthe wildcard there is not knowing what the U.S. tax law \u2013 and the beneficiary\u2019s\ntax situation \u2013 will be in 10 years. As the old saying goes, however, \u2018never\nlet the tax tail wag the investment dog.\u2019<\/p>\n\n\n\n<p>Overall, this new rule in the SECURE Act virtually puts an\nend to the \u201cstretch IRA,\u201d in requiring beneficiaries to withdraw IRA assets.\nThere is one exception, however, though it does not apply to you based on your\nquestion. If a spouse, a minor child of the account owner but not a grandchild,\na disabled person, a chronically ill person or someone not more than 10 years\nyounger than the original IRA holder is the beneficiary, they can spread out withdrawals\nover their lifetime based on IRS tables. In other words, the stretch IRA still\nlives but only for specific categories of beneficiaries. <\/p>\n\n\n\n<p>I\u2019m glad to hear you\u2019re working on your estate plan and\nencourage all readers to take time each year to revisit your will, living\ntrust, and other estate planning documents. I also think it\u2019s wise to have\nconversations with your family about estate matters, to ensure everyone is on\nthe same page.<\/p>\n\n\n\n<p>In addition to taking time to revisit your estate plan,\nfinding ways to manage volatility can also have positive impacts on your\nlong-term financial health. There are\npositive aspects of volatility that you don\u2019t want to overlook. <\/p>\n\n\n\n<p>To give\ninsight into ways to manage volatility, I am offering all readers our guide\n\u201cUsing Market Volatility to Your Advantage\u201d<sup>3<\/sup>. This guide&nbsp;can\nhelp you learn about our insights, based on decades of experience, about how a\nvolatile market may be able to help investors refine their strategies and\npotentially generate solid returns over time.<br>\n&nbsp;<br>\nYou\u2019ll get our ideas on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>How market volatility can \u201cshake up\u201d complacent investors<\/li><li>Potential bargains that may be uncovered through turbulence<\/li><li>Why volatility may help prevent overheating and market \u201cbubbles\u201d<\/li><li>What history shows us about opportunities for steady investors in turbulent markets<\/li><li>Plus, more ways you may be able to benefit from a volatile market<\/li><\/ul>\n\n\n\n<p>If you have $500,000 or\nmore to invest, download this free guide today by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The 2020 SECURE Act includes new rules about making withdrawals from an inherited <\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-9721","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9721"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9721\/revisions"}],"predecessor-version":[{"id":10354,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9721\/revisions\/10354"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}