Sharon Ravenscroft Estate Planning Blog
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.