Understanding The SECURE Act, Part 2: Stretch IRAs

January 30, 2020 / Eric Peterson /

Today’s Prep:

In part two of our series on the SECURE Act, we talk about some of the downsides to the changes. Eric explains the stretch IRA and what impact the SECURE Act made on it.

Equipping Points:

What are some of the negative sides to the SECURE Act? While we talked about some of the ways you may benefit from the changes last week, there are some changes that you might not be as thrilled about. The biggest downside being the elimination of the stretch IRA.

Previously, the stretch IRA allowed a non-spouse beneficiary to inherit tax-deferred accounts and span it over the course of their lifetime. Now, the account will have to be withdrawn over a ten-year period following the death of the original account holder.

Eric talks about what caused this change and the exceptions that come into play for various individuals. Certain people will still be able to stretch the inherited IRA based on specific situations. When does this change effective? Find out more on today’s episode of the Retirement Ready podcast!

Listen to the full episode or click on the timestamps below to learn more about the SECURE Act.

1:11 – The stretch IRA is being eliminated with the SECURE Act.

2:17 – Before the SECURE Act, a non-spouse beneficiary would only have to take out a percentage based on their life expectancy.

4:19 – Why is this changing?

6:17 – What options does a surviving spouse have?

7:19 – What are the exceptions?

9:40 – When does this go into effect?

Related Resources:

Understanding The SECURE Act, Part 1

Retirement Savings Options: IRA Contributions & Roth Conversions

How To Ask Better Financial Questions

Today’s Takeaway:

[spp-tweet tweet= “What we’re good at: How can we help your family and you succeed with this hard-earned money that you’ve put away for retirement? How can we insulate it from the ravishes of taxation, market risk, and the impact of losing a spouse? How can we generate income? –Eric Peterson“]