Only a surviving spouse can roll an IRA inheritance into their own IRA. However, a rollover may not be the best decision for a surviving spouse under the age of 59 ½. All non-spouse beneficiaries must maintain a separate account registered as an “Inherited IRA”.
The SECURE ACT of 2019 has eliminated for most beneficiaries the “Stretch IRA”, precluding the ability to stretch Required Minimum Distributions over their lifetimes. Most beneficiaries are now required to withdraw all balances within 5 or 10 years. Only certain individuals who are “Eligible Designated Beneficiaries” can still have a Stretch IRA—spouses being one of them.
April 15th is the deadline for making Year 2023 contributions to an IRA or a Roth IRA. There is another critical deadline affecting IRAs and all retirement plans that requires attention.
That other deadline is the moment before you leave this world! Once that inevitable event happens, no changes of any sort can be made to your beneficiary designations. Do not make any of the common mistakes that can significantly reduce your heirs’ inheritance, such as:- Failing to name contingent beneficiaries—or a primary beneficiary!
- Naming your estate as a beneficiary. (Your estate is not a trust.)
- Neglecting to review and update (if necessary) beneficiary designations after a divorce, marriage, or other major life event.
- Making testamentary charitable bequests from non-IRA funds rather than from the IRA or retirement plan.
- Devising astute estate strategies to be implemented through a will or trust and forgetting that beneficiary designations take precedence over all other written directives—which can negate your planning!
Distribution requirements and their timing are complex and widely misunderstood, especially given recent tax legislation. Call Fred with your questions.
Other topics impacting your legacy are raised in A Guide to Navigating Retirement. Ask Fred for a free copy if you need one for yourself or a friend.