Fidelity does not guarantee accuracy of results or suitability of information provided. Asset Allocation: Why it's so important, and how to determine your own. Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. In December 2019, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act. If the original account owner died in 2020 or later, the new rule is that the successor beneficiary (regardless of who it is) will have to distribute the remainder of the account within 10 years of the death of the original beneficiary. If you're not a spouse or an EDB, then you must distribute all assets from the inherited IRA within 10 years of the original owner's death. If you inherit an IRA or 401(k) from your spouse, nothing much changes. Since he passed away prior to January 1, 2020, you would still have the option of setting up an Inherited IRA prior to December 31, 2020 … If you are the owner or inheritor of an IRA or other qualified retirement plan, you may wish to take some time to consider how the SECURE Act may impact your own retirement accounts along with your beneficiaries and reevaluate your retirement, estate planning, and gifting strategies. **If a) the inherited IRA is a traditional IRA, b) you are older than the deceased IRA owner, and c) the deceased IRA owner had reached his “required beginning date” by the time he died, your RMD could actually be smaller than the amount calculated above, as you can calculate it based on what would be the deceased owner’s remaining life expectancy (from the “Single Life” table) using the owner’s age as of his birthday in the year of death (and reducing by one for each following year). 06/01/2020. Continue to own the account as a beneficiary. All information you provide will be used by Fidelity solely for the purpose of sending the email on your behalf. Email address must be 5 characters at minimum. As a spouse beneficiary, you have two primary options: Note: there’s no deadline on a spousal rollover. In these circumstances, I’d suggest looking for someone with CPA or CFP certification. ), Non-Spouse Beneficiary RMDs See it on Amazon, 401k Rollover to IRA: How, Why, and Where, Single Premium Immediate Annuities and Retirement Planning, Social Security Strategies for Married Couples, “Single Life” table in IRS Publication 590-B. What might be a significant change? Important legal information about the email you will be sending. In 2021, the RMD will be the 12/31/2020 balance, divided by 51.3. Because the 10-Year Rule requires that an inherited IRA be liquidated over a shorter amount of time, it is more likely that the beneficiary will be pushed into a higher income tax bracket. Now, for IRAs inherited from original owners that passed away on or after January 1, 2020, the new law requires most beneficiaries to withdraw assets from an inherited IRA or 401(k) plan within 10 years following the death of the account holder. Click here to read more, or enter your email address in the blue form to the left to receive free updates. If the original account owner died in 2019 or prior, successor beneficiaries are subject to the same “old rules” as described above for the original beneficiary, with one exception: the successor beneficiary must continue to take distributions each year as if they were the original beneficiary. e.g. Inheritor checklist How should you do this? You are planning to move from a high income tax state (like California, New York, or New Jersey) to a low income tax state (like Florida, Texas, New Hampshire, or Washington), or vice versa. Read customer reviews on Amazon, Corporate Finance Made Simple: Corporate Finance Explained in 100 Pages or Less You can still generally stretch out required minimum distributions (RMDs) your distributions over your lifetime. The “old rules” discussed in the remainder of this article apply in situations in which either: Under the “old rules,” there are still actually two sets of rules: one set of rules that applies if the deceased owner was your spouse, and another set for any other designated beneficiary.
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