By Lane V. Erickson, Idaho Estate Planning Attorney
Unless you’ve been living under a rock, you’ve likely heard about the SECURE Act that was recently signed into law by President Trump. This act provides a number of wonderful benefits to individuals who have qualified retirement plans such as 401ks, IRAs, Simple IRAs, and so forth. It is likely that these fantastic benefits will help millions of individuals better prepare for retirement.
However, not everything about the SECURE Act is golden. One of the items that most individuals overlook about the SECURE Act, that caught the attention of all estate planning attorneys, is the 10-year limitation on withdrawal of inherited retirement accounts such as IRAs or 401ks.
To put it simply, before the SECURE Act was passed, an individual could elect to immediately withdraw all the money in a protected retirement account that they inherited or, they could choose to take a required minimum distribution RMD based on their expected length of life. If a person was young, the RMD applicable to them would be quite small which would reduce the amount of taxes they would have to pay from the withdrawals they took from the protected retirement account they inherited. However, now, with the SECURE Act in place, there is a 10-year limitation on withdrawals from an inherited account.
There are some exceptions to this requirement. For instance, a spouse who inherits a protected retirement account is not subject to the 10-year limitation. Additionally, a minor child who inherits a retirement account is also not something to the 10-year limitation. Finally, if an individual who inherits a retirement account is critically ill, the 10-year limitation may also not apply.
However, for the bulk of individuals inheriting a retirement account, the 10-year limitation will apply which means that more taxes will have to be paid by the person who inherits the account than would have been paid before the SECURE Act was put in place.
Because of the SECURE Act, it may be wise for an individual who owns a retirement account, to think about the options that exist for them through their estate planning. At the very least, it would be wise for such an individual to talk with a qualified Idaho estate planning attorney to make sure they understand how the SECURE Act affects them and their estate planning. If you have questions, we are confident we can help.
ENLIST AN IDAHO ESTATE PLANNING ATTORNEY TO HELP YOU
If you have any questions about your estate or how to simplify your plans for your family and loved ones, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Pocatello. You can also email Lane Erickson directly at firstname.lastname@example.org. We will answer your questions and will help you solve your Pocatello Estate Planning problems. I have helped numerous clients create their own customized estate plans and I’m confident that I can help you too.