The SECURE Act may have upended the rules for inherited IRAs, but the rules for spouse beneficiaries remain as advantageous as ever. In fact, naming a spouse as an IRA beneficiary is a better option than ever before. Now, an older spouse beneficiary will get more favorable payout options than a much younger adult child. Why? That is because the adult child must use the 10-year rule. No such restrictions exist for spouses. The SECURE Act keeps all the special benefits for spousal beneficiaries intact.
Question:Has the deadline to make an IRA contribution for 2020 been extended since the 2020 tax filing date has been extended to May 17, 2021?RobertAnswer:Hi Robert,Yes. The 2020 IRA contribution deadline is also extended to May 17, 2021.
Question:Our estate planning attorney prepared trust documents a few years ago and he advised us to name the trust as a beneficiary. This was done after discussion with him regarding a situation in case our son(s) divorce their wives. The trust is prepared so that our sons are designated beneficiaries.I've been reading your Slott Report article that advises against naming a trust as IRA beneficiary. Please let me know how to make sure half of the inherited IRA funds don't go to our son's divorced spouse.Thanks in advance.
As Halloween approaches and the leaves change color, families gather ‘round weekend campfires, roast marshmallows, and share spooky stories. Watchful owls hoot in the dark. In the distance, a wolf howls at the moon. A rustle in the bushes. A twig snaps. What was that?!? A dad in a flannel shirt shines a flashlight under his chin, his features glowing red. He scans the anxious little faces, awash in flickering firelight, and tells a tale about the Ghost Rule.Once upon a time, a kindly little man had an IRA account. He did not care much for tax or estate planning. He did not care to fill out forms, as he did not care much for details. He cared only to sit on his front porch and rock in his chair and watch the world go by.
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.
If you inherit an IRA, especially if it is a larger one, you may be afraid of being stuck with the five-year distribution rule. If this rule applies, your IRA must be entirely emptied in five years which can be a serious tax hit. Fortunately, you are much less likely to be stuck with the five-year rule than you may think.
It’s Halloween season! This is the time for ghosts, witches, and trick or treating. What does Halloween have to do with your IRA? You might be surprised to hear that your IRA may be haunted. How can that be? Believe it or not, actions you take, or don’t take, can haunt your beneficiaries for years down the road.
This week's Slott Report Mailbag examines RMDs when you are still working past 70.5 years old and inheriting multiple IRAs.
Have you inherited an IRA? What type of IRA is it? Your answer will matter a lot when it comes to your tax bill. Inheriting a traditional IRA will have very different tax consequences than inheriting a Roth IRA.
It is important to know what your IRA custodian will tell you and what they will not or cannot tell you. The I in IRA stands for individual and many times it is up to the individual to know things or keep track of them.
