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The SECURE Act is the law for 2020 and beyond. Advisers are already scurrying to explain the retirement rule changes to clients, especially those with large IRAs who had planned on a stretch IRA for their heirs. We are receiving an avalanche of questions on exactly how and when this major change will be applied.
The new starting age is 72 for required minimum distributions (RMDs). "The half year part was baffling to a lot of people," said IRA expert Ed Slott, founder of IRAHelp.com. "So that feature is gone. Good riddance."
“The fact that they put all this in there doesn’t mean it will have a major impact,” said Ed Slott, founder of IRAhelp.com. “There’s a lot of trimming around the edges.”
People who have saved $1 million or more in an IRA and plan to pass it on to someone other than their spouses should consider doing Roth conversions, said Ed Slott, president of Ed Slott & Co., which specializes in IRA education and training.
With the stretch IRA no longer an option under the bill, Slott suggests possibly naming a spouse as the beneficiary so that the assets can be stretched across the spouse’s lifetime and then passed on to a grandchild, who would have 10 years before having to draw it down completely.
The demise of the stretch IRA is likely to be unwelcome among financial advisors, who have counseled clients to use them as a way of passing down wealth while minimizing the tax hit. An heir could slowly draw down an inherited account over many decades. But the new 10-year deadline would make the IRA a “lousy estate planning vehicle,” retirement expert Ed Slott tells Kapadia.
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"You still have to get that SEP payment in on time, so don't wait until Oct. 15 when financial institutions and advisors will be inundated with last minute requests. If possible, get your payment in at least a few days earlier," said Ed Slott, founder of IRAhelp.com.
