Hi there and thank you for stopping in. My name is Tina Anders, I am the Fee only certified financial planner for Anders Wealth Management, located here in Petaluma, California.
I’m here to talk to you today about the Secure Act. Here’s a key feature of the Secure Act, important right here. There used to be a rule that if you inherited money from an individual retirement account, you could stretch the distributions from that IRA over your lifetime. You can no longer do that. There is what’s called a 10-year payout rule. And what that means is while there will be no required distributions during the 10-year period, you must liquidate the account within a 10-year period.
There are a few people who are exempt from the 10-year payout rule. They are surviving spouses, minor children, chronically ill folks, disabled folks, folks that are fewer than 10 years younger. That’s fewer than 10 years younger of the deceased. Then you’re able to take it over your lifetime. But the thing about the minor child is the minor child can stretch it over the lifetime of the child. However, once that child reaches the age of majority, that child has to be subject to the 10-year payout rules.
And I wanted to mention to you trusts as a beneficiary to an individual retirement account. Oftentimes the reason people use a trust as a beneficiary to their IRA instead of a child or a grandchild or a grant, great grandchild is because they don’t want those beneficiaries to receive a lump sum of their individual retirement accounts. So, they make the trust the beneficiary and then the trust can pay out as the trust dictates to the beneficiary child, grandchild, great grandchild, Right?
But here’s the thing. Trusts are also now required to follow the 10-year payout rule. So, what that means is your wishes may not be honored if you have a trust as a beneficiary of your IRA. So, I encourage you to see your estate planning attorney, if you don’t know one, I can refer you to one. You want to check with your estate planning attorney who drew up your paperwork, revisit the paperwork, make sure it’s going to be set up for you so that your wishes will be honored. Should you predecease those beneficiaries.
Thank you again for stopping by. If you have any questions, comments or you have a topic you’d like me to talk about. Please either e-mail me at [email protected] or go to my contact page on my website at anderswealth.com.
And fill out as much or as little as you want on the contact page. But at the bottom, there’s a text box put in whatever you want to make sure that I see, and I will reply to you. And if you want me to talk about a topic, I will do my best to do so. Thanks again for stopping by. I’m in your corner.