The End of the Stretch IRA And More: Justin Crain, Partner

06 Jan The End of the Stretch IRA And More: Justin Crain, Partner

Posted at 16:14h in Estate Planning by
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The End of the Stretch IRA

The Stretch IRA was a financial strategy that allowed inherited IRAs to be stretched out over the lifetime of a beneficiary. To put it another way, Stretch IRAs allowed a beneficiary who was younger than the former owner of the IRA to stretch out distributions over the beneficiary’s (presumably longer) lifetime, resulting in a longer period of time for funds to compound principal and defer tax.

The SECURE Act signed into law on December 20th, 2019 ended the ability to use Stretch IRAs as a financial strategy. Under the new law, beneficiaries inheriting an IRA are required to take the funds out, and pay the appropriate taxes, within 10 years of the death of the original IRA owner.

Changes to Age for IRA RMDs

Another IRA rule that has changed under the SECURE Act is the age at which a traditional IRA owner is required to begin taking their required minimum distributions (RMDs). Previously, an IRA owner was required to start taking distributions out of their IRA by April 1st of the year after turning 70 1/2. The SECURE Act changed that age to 72, unless you are already 70 1/2 or more as of December 31, 2019.

Do you have questions about how the legislative changes may impact you and your family?


Contact Crain & Wooley today.

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10 Comments
  • Gene Valcke
    Posted at 10:30h, 08 January Reply

    We are facing both of these issues. Thank you for the update.

    • admin
      Posted at 12:09h, 08 January Reply

      So glad that this article was helpful. Feel free to reach out with any questions.

  • Cecil Rasor
    Posted at 13:18h, 08 January Reply

    Great thanks for the update in law.
    Rick

    • admin
      Posted at 13:27h, 08 January Reply

      Our pleasure!

  • David Hallo
    Posted at 13:25h, 08 January Reply

    question on the stretch IRA – I am assuming that this applies to both traditional and Roth IRAs? Is that correct?

    • admin
      Posted at 13:27h, 08 January Reply

      Let me double check on that and get right back with you, Mr. Hallo.

    • admin
      Posted at 14:01h, 08 January Reply

      Hi Mr. Hallo! Non-spousal inherited Roth IRAs will have to distribute within 10 years.

      • admin
        Posted at 14:04h, 08 January Reply

        We have gotten a great response on this update here and via email and phone. We will be doing a couple of follow-up postings so stay tuned!

  • Artie Pagan
    Posted at 19:30h, 08 January Reply

    Great information. Thanks for providing it!

    • admin
      Posted at 08:44h, 09 January Reply

      Most welcome! We are compiling a few FAQs that we will be posting in the next week or so – be on the look out.

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