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secure act

RMDs Under the Secure Act & Roth Conversions: Today's Slott Report Mailbag

Question: Would you kindly clarify the rule that governs the withdrawal period and the tax implication (if any) of RMDs from an inherited IRA? The SECURE Act and the IRS document 590B are not clear. Here is the situation: I have a traditional IRA with my granddaughter as the sole beneficiary. My understanding is that before the SECURE Act, inherited IRA's had to issue annual RMD's if the original owner was taking them. The SECURE Act seems to say that annual RMD's are no longer required to be taken by a non-spouse beneficiary, just as long as the account is fully distributed in the 10-year period.

Inherited IRAs and the 10-Year Rule: Today's Slott Report Mailbag

Question: Hi there! I have a quick question, so I thought I’d reach out to you to get your take on this. This year, IRA RMD’s have been waived, even for inherited IRA’s. That said, if a non-spouse inherits an IRA this year – and the new RMD rules dictate a 10-year withdrawal – but this year’s RMD is waived – does this year (2020) still count as year 1?

SECURE ACT SUCCESSOR BENEFICIARY RULES AND PAYING BACK CORONAVIRUS-RELATED DISTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

Question: Ed and team, I am sure my question has been asked by others. Now under the SECURE Act with no more stretch features to an inherited IRA, if a person dies and leaves his IRA to a child and that child waits 9 years and 11 months after the year of death and named his children (taxpayer’s grandchildren) as his successor beneficiaries, do they have only one month to clean out the IRA or does the 10 year period begin all over.

SECURE Act: “We Don’t Know Yet”

Gradually, the IRS is clarifying sections of the SECURE Act that require further guidance. In Notice 2020-68, released September 2, the IRS addressed a number of items in a Q&A format. For example, “Is a financial institution that serves as trustee, issuer, or custodian for an IRA required to accept post-age 70½ contributions in 2020 or subsequent taxable years?” Surprisingly, the answer is No. Financial institutions do not have to accept post-age 70 ½ IRA contributions even though such contributions are permitted by the SECURE Act. (Why an institution would refuse these deposits is beyond me.)

Inherited Roth IRAs and Roth Conversions: Today's Slott Report Mailbag

Question: Does the SECURE Act have any implication to Roth IRA account inheritance longevity? Please let me know. Thank you. Regards, Vikram Answer: Hi Vikram, The SECURE Act does affect inherited Roth IRAs in the same way it affects inherited traditional IRAs. Most beneficiaries who inherit a Roth IRA in 2020 or later will be subject to a 10-year payout period.

IRS Issues Guidance on Certain SECURE Act Changes

In Notice 2020-68, issued September 2, 2020, the IRS gave limited guidance on certain retirement provisions of the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”). The SECURE Act was signed into law on December 20, 2019. Notice 2020-68 does not address one of the most significant SECURE Act changes: the elimination of the stretch IRA for most non-spouse beneficiaries and its replacement with a 10-year payout period.

Inherited IRAs and the 60-Day Rollover Window: Today's Slott Report Mailbag

Question: Good Afternoon Ed Slott and Company, LLC, I was inquiring about a recent situation with a client that came up and if you could be of any assistance. We recently had a client pass away who was the account holder of an inherited IRA from his mother. This client died in July 2020. The deceased listed his wife as 100% primary beneficiary of his inherited IRA and she will inherit this second-generation IRA once the new account is opened.

SECURE Act Gives Businesses Extra Time to Establish New Retirement Plans

Hidden within the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) signed into law last December is a provision giving businesses extra time to establish certain new tax-qualified retirement plans. Prior to the SECURE Act, a new workplace plan had to be adopted by the last day of the employer’s tax year. Despite that deadline for adopting a new plan, businesses were always allowed extra time to make retroactive employer contributions for any year (including the plan’s first year). The employer contribution deadline is the due date (including extensions) of the company’s federal tax return.

Stretch IRA Lives on For Some Beneficiaries

Last year the SECURE Act became law and eliminated the stretch IRA for millions of IRA beneficiaries. However, for some IRA beneficiaries the stretch lives on. For most beneficiaries, the stretch is now replaced with a ten-year payout period. Beginning for deaths in 2020, the ten-year rule will apply to designated beneficiaries who are not eligible designated beneficiaries under the SECURE Act. Eligible designated beneficiaries include spouses, minor children of the IRA owner, chronically ill and disabled individuals and beneficiaries who are not more than ten years younger than the IRA owner.

Opening an IRA Account and IRA Rollovers: Today's Slott Report Mailbag

Question: Hello, I am aware of the IRA one-rollover-per-year rule. What I can’t find is if a married couple that files jointly violates the rule if they each do a rollover from their own individual IRAs? For example: One person has an IRA in their name and takes a distribution and rolls it over within the 60-day limit avoiding the taxable distribution. Now, can the other spouse also take a distribution from their own IRA and do the same without incurring a taxable distribution? Thanks so much. Maggie

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