Significant Changes to Required Minimum Distributions from Inherited Retirement Accounts May Affect your Estate Plan

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Downs Rachlin Martin PLLC

Effective January 1, 2020, the rules regarding distributions from inherited retirement accounts have changed significantly. 

Under prior law, a so-called “designated beneficiary” of a retirement account could receive distributions over his or her lifetime, sometimes called “stretch IRAs.”  A “designated beneficiary” was any individual and included trusts that met certain conditions.

The new law changes the distribution rules for most designated beneficiaries other than a spouse.  Under the new law, the payment period from an inherited retirement account to most designated beneficiaries may not exceed a period of 10 years commencing on the date of death of the account owner. 

In the event you designated a trust as primary or alternate beneficiary of any of your retirement accounts we recommend that you schedule an appointment to discuss the implications of the new laws and determine whether a change to your beneficiary designation or to your trust should be made.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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