For many, the new 10-year rule drastically diminishes the chances of withdrawing assets in a tax-friendly manner. Here's what you need to know about the Secure Act.
The Secure Act, which was signed earlier this month, changes the way beneficiaries will receive money from inherited retirement accounts, but not everyone is in danger of a big tax hit.
Stretching the withdrawals over the beneficiary’s life expectancy — the so-called stretch IRA provision — meant paying less in taxes, whereas the new rule threatens to result in higher tax bills, especially if the inheritor is in her peak earning years. Required minimum distribution calculations are based on numerous factors, including beneficiary’s age, life expectancy and the account balance.
Spouses, disabled beneficiaries and others under the exception will still be allowed to take distributions over their life expectancies.How should I withdraw the money from this account under the new 10-year rule? This depends entirely on the individual’s situation, but there are some factors to take into consideration.
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