Inherited AccountsInherited IRAs
Traditional IRAs
Roth IRAs
Traditional IRAs
Roth IRAs
Over the last decade retirement accounts have increasingly been the focus of conversations in Congress and the Internal Revenue Service. We’ve seen many types of changes to these account types, including changes to the requirements for how much beneficiaries have to take out of their inherited accounts annually, how quickly beneficiaries must deplete accounts entirely, who amongst beneficiaries are eligible for special exceptions, and many other intricacies.
All of this must be sorted out by beneficiaries often during a time where they are still dealing with the emotions of losing loved one. We have seen first hand how valuable a trusted advisor can be in these situations and take pride in bringing clarity and answers to our clients.
We’ll help you develop a plan that minimizes taxes and maximizes the benefits that are given to retirement accounts like inherited traditional IRAs and inherited Roth IRAs.
- 1997 July
Congress passes the Tax Payer Relief Act, taking effect in 1998. Introduced in the act by Delaware Senator William Roth was the groundbreaking new account, the Roth IRA. It would go on to become a valuable weapon in the arsenal of taxpayers. While primarily for tax-free growth and withdrawals for retirement, the nuanced rules of the account and it’s interactions with other parts of the tax code allowed for many different financial planning strategies to incorporate this new, wonderful account.
- 2017 December
The Trump Administration passed some of the most sweeping changes to tax law in modern history. Those changes included doubling the standard deduction from $12,000 to $24,000 for individual tax filers and lowering the highest marginal income tax rate. Each of these changes provided ample opportunities for planners to adjust strategies including those that incorporate individual retirement accounts.
- 2019 December
Congress passed the SECURE Act or Setting Every Community Up for Retirement Act. As part of the new law all types of changes took place to retirement accounts that changed the way advisors had been guiding clients for years.
- 2022 December
SECURE Act 2.0 passed updating even more of the provisions around retirement accounts and the guidelines that surround them. Changes to Individual Retirement Accounts (IRAs) and Inherited Individual Retirement Accounts were among the new legislation.
Most notably amongst those changes was the elimination of the Stretch IRA. Prior to 2022, certain beneficiaries set to inherit an IRA could elect to use a “Stretch” strategy that would allow them to keep funds in their newly Inherited IRA to take advantage of the account’s tax deferred benefits. Now the IRS has implemented a “10 year rule” that requires most beneficiaries to remove funds each year and have the entirety of the account distributed within 10 years. However, beneficiaries must be careful as this new rule does not apply in all cases, such as when a sibling (who is within 10 years of age) inherits another sibling’s IRA account.
July 1997
Congress passes the Tax Payer Relief Act, taking effect in 1998. Introduced in the act by Delaware Senator William Roth was the groundbreaking new account, the Roth IRA. It would go on to become a valuable weapon in the arsenal of taxpayers. While primarily for tax-free growth and withdrawals for retirement, the nuanced rules of the account and it’s interactions with other parts of the tax code allowed for many different financial planning strategies to incorporate this new, wonderful account.
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