Inherited IRA Rules AFTER the Secure Act [IMPT Changes]

In December 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed. It was designed to help save for retirement and make it accessible to more people. With this bill, the rules changed on Inherited IRAs.Show more

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Before the Secure Act, you could stretch your inherited IRAs, 401k’s, 403b’s, etc., over your life expectancy. Now, depending on who you are as a beneficiary, dictates how you must take the assets.

The rule is broken down by the following 3 types of beneficiaries:
Eligible Designated Beneficiaries: If you fall into this category, you may still stretch your inherited IRAs over your lifetime.

Designated Beneficiaries: Designated beneficiaries must follow the 10-year rule. This group includes nearly everybody that wasn’t an eligible designated beneficiary. There are no limitations to how the funds must come out if the account is liquidated in the 10-year period.

Non-Designated Beneficiaries: These folks must take out the funds over a 5-year period. These beneficiaries include charities, certain trusts, your estate that was named in your will.

Since IRAs distributions are taxed as normal income, make sure to check with your CPA or tax advisor to see which withdrawal option makes most sense to your specific situation.

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