The SECURE Act and Inherited Retirement Accounts: Today’s Slott Report Mailbag

Friday, January 03, 2020

Sarah Brenner, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

With the SECURE Act, can a person who is older than 70 ½ fund a 2019 Traditional IRA?  The SECURE Act goes live on 1/1/2020, and an IRA can be funded up to 4/15/2020 for the previous year.  Any reason they cannot?

Answer:

Unfortunately, the answer is no. The new rule eliminating the age limit for traditional IRA contributions is effective January 1, 2020. Prior year contributions for 2019 would be subject to the old rules, including the age limit. The bad news is that a 2019 contribution would not be allowed. The good news is that for 2020 and later years, the age limit is gone.

Question:

Good Day,

We unfortunately lost a special family member at the end of October. Her employer sponsored savings plan was to be inherited primarily by her two adult daughters. but the paperwork from Vanguard has yet to be distributed to all beneficiaries. Do you know if the SECURE Act will be enforced for those accounts established after January 1, 2020, or if it will be driven by the date of death of the original account holder?

Getting this passed this late is going to cause major work for the brokerage and investment houses over the last week of 2019.

Thanks in advance for your time and consideration.

Kindly,

Art

Answer:

Hi Art,

Sorry for your loss. Because your friend passed away in 2019, she is subject to the old rules and the stretch would be available to her beneficiaries. This is true regardless of when the paperwork is processed. The new SECURE Act rules limiting the stretch will only apply to beneficiaries of IRA owners who die after December 31, 2019.

 

Content Citation Guidelines

Below is the required verbiage that must be added to any re-branded piece from Ed Slott and Company, LLC or IRA Help, LLC. The verbiage must be used any time you take text from a piece and put it onto your own letterhead, within your newsletter, on your website, etc. Verbiage varies based on where you’re taking the content from.

Please be advised that prior to distributing re-branded content, you must send a proof to [email protected] for approval.

For white papers/other outflow pieces:

Copyright © [year of publication], [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] Reprinted with permission [Ed Slott and Company, LLC or IRA Help, LLC – depending on what it says on the original piece] takes no responsibility for the current accuracy of this information.

For charts:

Copyright © [year of publication], Ed Slott and Company, LLC Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.

For Slott Report articles:

Copyright © [year of article], Ed Slott and Company, LLC Reprinted from The Slott Report, [insert date of article], with permission. [Insert article URL] Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.

Please contact Matt Smith at [email protected] or (516) 536-8282 with any questions.