Inherited IRAs and the pending SECURE Act and RESA in Congress

Hi, I have an inherited IRA and take yearly RMDs. Two retirement bills in Congress, the SECURE Act and RESA, would require recipients of inherited IRAs (except spouses and minor children) to withdraw the entire IRA amount within 10 years. In other words, this does away with the stretch IRA option for these recipients. Obviously, that would force many people, including myself, into a much higher tax bracket for those 10 years, and taxes would eat up a much larger portion of their IRAs. My question is: do the provisions that get rid of the stretch IRA apply to people who are currently taking RMDs from an inherited IRA? Or does only start when the IRA owner dies after Dec 31, 2019?
Thanks, I’d appreciate any answers.
Lisa



The proposed stretch reduction to a max of 10 years will only apply to deaths after 2019, so these bills should not affect your current stretch. This bill will have the most negative affect on those who inherit large IRA accounts at a relatively young age, including those beneficiaries who inherit Roth IRAs which were converted mostly for the benefit of the beneficiary rather than the IRA owner. Some of those conversions will likely no longer be done and tax revenue in the 10 year window may not be increased as much as expected. 



Thanks so much for your comments, I can breathe a little easier. I agree, this bill will cut down on Roth conversions, if the beneficiaries can’t stretch withdrawals past 10 years.



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“Obviously, that would force many people, including myself, into a much higher tax bracket for those 10 years, and taxes would eat up a much larger portion of their IRAs. “



The 5 year rule would live on with respect to non individual beneficiaries, so depending on the type of beneficiary for the account, there could be a 5 year rule, a 10 year rule, or life expectancy (surviving spouses). Not sure what happens for deaths after the RBD with an older beneficiary than the decedent. Will the decedents’ remaining life expectancy be capped at 10 years?



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