SECURE ACT and stretch IRA

Home Fairmark Forum Retirement Savings and Benefits SECURE ACT and stretch IRA

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  • #5052
    deedee8712
    Participant

    Back in August I read about SECURE Act Changes for Nonspouse Designated Beneficiaries. At the time, the Act listed four categories of “Eligible Designated Beneficiaries” for which the 10-year distribution limit would not apply. I’ve been reading articles since the law actually passed but have not seen any mention category #4 below (an individual who is not more than 10 years younger than the deceased participant or IRA owner). Was it removed from the final bill?

    All distributions must generally be completed within a 10-year period beginning in the year following the year the participant or IRA owner dies. Thus, the 10-year period replaces the 5-year default period. However, unlike prior law, the 10-year period would apply regardless of whether the plan participant or IRA owner dies before or after reaching the RBD (Required Beginnning Date for RMDs). The change would apply to distributions to a non-spouse beneficiary from retirement plans and IRAs (including Roth IRAs) made after the death of the plan participant or IRA owner who dies after December 31, 2019.

    Limited exceptions apply for:
    1) a newly created class of individuals called “eligible designated beneficiaries”;
    2) collectively bargained plans;
    3) certain governmental plans; and
    4) existing annuity contracts.

    Newly Created Class of “Eligible Designated Beneficiaries”
    The 10-year distribution limit would not apply to eligible designated beneficiaries. These include:
    1) a surviving spouse;
    2) a minor child;
    3) a disabled individual; and
    4) an individual who is not more than 10 years younger than the deceased participant or IRA owner.

    #5053
    Alan S.
    Participant

    If a beneficiary is not more than 10 years younger than the decedent, they will still get the full stretch. That remained in the final bill. Technically, they fall into the class of “eligible beneficiaries”. This provision will allow many sibling beneficiaries to qualify as “eligible”.

    Note that a “Chronically ill” person certificated as such as of the date of death is also an eligible beneficiary. Similar to disabled, but has some technical differences. Note that the minor child must be the child of the plan owner, and eligibility to avoid the 10 year rule ends once the minor reaches the age of majority in their state.

    #5076
    mrRandallgedly
    Participant

    Ive not ever had that problem with here. I get It sometimes with other sites, that are actually secure and It turns out Its my old browser being crap.

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