Today's Hack

Everyone we’re working with for a retirement plan has to keep an eye on the age of 72 because that’s when the required minimum distributions begin. While we all know money has to come out of our retirement accounts, it’s not as simple to understand all the requirements and then execute that efficiently. Today we’ll continue our deep dive with part two focused on the inherited account side of things.

We began breaking down an aspect of retirement planning that gets pretty confusing on our last episode, and we’ll finish out the deep dive on required minimum distributions here in part two.

As we break this down on the show, we’ve separated it out into two different pieces: RMDs on your own accounts and RMDs on inherited accounts. There are so many details – not all of them clearly laid out – that you really need to have a financial advisor on your side to help you build a plan for how you’ll pull out the money when it’s time.

Today we’re focused on the inherited accounts and what the IRS expects in terms of RMDs from the beneficiaries that receive these accounts. It’s going to vary from spouse to children to undesignated beneficiaries, and the rules recently changed with the introduction of the SECURE Act in 2020 so there’s a lot to discuss.

Join us on today’s episode as we break down these major topics:

  • What two options you have as a surviving spouse. [1:15]
  • Understanding the changes that came down when the SECURE Act was introduced on January 1, 2020. [3:27]
  • The rules that apply to children who inherit your IRA and the caveats that come with those.  [7:40]
  • Do the rules change at all when you are leaving multiple accounts? [14:36]
  • Roth IRAs do fall under the 10-year RMD rule but remain tax-free. [18:04]

A Quotable Moment

“IRA custodians can’t make their own rules as far as distributions. It has to follow what the IRS says.”

-Phil Putney

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