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Sharon Ravenscroft Estate Planning Blog

Welcome to my blog covering all things estate planning, family estate planning. business planning, wills, trusts & probate.
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New laws for IRAs

Effective in 2020, there are changes that apply to a qualified retirement account such as IRA or 401k. Designated beneficiaries will be required to distribute the qualified retirement account in 10 years instead of over a lifetime.

As you consider who you want to list as a designated beneficiary, more designated beneficiaries maybe better for a large IRA or other qualified retirement account. Then, each beneficiary would have a smaller amount to distribute over 10 years and could very well pay a lower tax rate on the distribution. Listing adult grandchildren along with children as beneficiaries would provide smaller accounts to be taxed to each beneficiary. Remember not to list a minor beneficiary on a qualified retirement account, because if the minor is to receive more than $10,000, a court conservatorship is required and that is costly.

Another change is the increase in the age of having to take required minimum distributions from 70 1/2 to 72. 

Also, those over the age of 70 1/2 can continue to make contributions to an IRA from continued employment compensation.

Estate Tax Exclusion Change Now and in 2025
2020 Tax Exemption Increased