Inherited IRA's The Unrecognized Tax Problem (Elimination of Stretch IRA’s)
Very quietly there was an unrecognized tax increase starting in 2020. The secure act signed in Dec 2019 eliminated stretch IRA’s for most non-spouse beneficiaries. Under the new rules, the non-spouse person who inherits an IRA has 10 years to take the money out. There is not a uniform amount that needs to be taken out each year, just that all the money has to be out after 10 years. The issue is that if you earn a reasonable return say 6%, and you want to take a uniform amount each year, you are going to have to take out about 13.6% per year. This is a large increase. If you want to keep your tax level the same, a lot of tax planning is needed.
Wealth management is a math problem that continues to evolve. We enjoy solving this problem.
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Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.
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