Why You Should Undergo a Beneficiary Designation Review
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Before the Secure Act was passed, the stretch IRA let beneficiaries withdraw from an inherited IRA at any point in their life. However, now that the Act has passed, that’s no longer the case for some individuals.
There are three types of beneficiaries in an IRA: non-designated beneficiaries, non-eligible designated beneficiaries, and eligible designated beneficiaries.
Non-designated beneficiaries of an IRA aren’t individuals, but rather institutions like charities and estates. Non-eligible designated beneficiaries include grandchildren and older children. With the passing of the Secure Act, persons/entities that fall under either of these two classifications now only have 10 years to withdraw from an inherited IRA.
"I encourage you to speak with your advisor and
review some strategies to help you plan for this new law."
A surviving spouse or younger children (within a certain age range) are examples of eligible designated beneficiaries, to whom the stretch IRA still applies. They’re now the only ones who have their entire lifetime to withdraw from that IRA.
The passing of the Secure Act has had some significant consequences, so I encourage you to speak with your advisor and go over some strategies to help you plan for this new law.
One thing that we plan to do for all our clients come September is to conduct a beneficiary designation review to make sure that your IRA beneficiaries are designated properly. If they aren’t, it can cause all sorts of legal and tax problems. A simple beneficiary designation review can help solve several problems.
If you have any questions or need someone to speak to about your beneficiary designations, please reach out to us. We’ll be happy to discuss it with you.
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