Several changes in retirement planning took effect recently, and everyone should be aware of them.
Changes in Retirement Planning
It is important to be aware of the changes in the area of retirement plans. This will ensure that your own estate and retirement planning is still sufficient or if it needs updates.
We have long been accustomed to the rule for our IRAs. And that once we attain the age of 70½ years we have to begin taking minimum distributions from those IRAs. Those fortunate enough not to need to withdraw from their IRAs may now postpone the required minimum distributions from both IRAs and qualified plans until attaining age 72.
In addition, if you are still working, you may now have the ability to make deductible contributions to an IRA after age 70½.
The Biggest Retirement Planning Change
The single largest change that will cause individuals to potentially revisit their estate planning with regard to retirement assets is the change in the “stretch” rules. Previously, upon the death of an IRA owner or another retirement plan participant, a beneficiary could in many instances “stretch” the distribution of their inherited plan proceeds over their entire lifetime.
However, the new rules require that upon the death of the owner, the beneficiary (excluding a surviving spouse, minor or disabled child beneficiary) would be required to draw down the entire inherited account within 10 years. This may of course result in a beneficiary receiving distributions during their prime earning years rather than over a lifetime, resulting in substantially higher income taxes.
In any event, these changes require careful consideration of any estate plan. This includes traditional IRA or other qualified retirement plan assets.
The Secure Act
These changes and more are part of legislation that everyone knows as the Secure Act. You can find other changes and summaries of the act online. The most common provisions that apply are changes relating to distributions from retirement plans.
Be certain your retirement and state planning is up to date. Find more information on www.apwlawyer.com.
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