The SECURE Act was initially signed into law in 2019 and changed our retirement accounts can be used. It also changed the regulations on how a beneficiary may withdraw from a gifted retirement account. It was updated in 2022, and the IRS recently sent a Notice of another change. Many tax laws are confusing, and you may ask what the SECURE Act July 2023 update means to your retirement plans.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act was established to increase access to tax-advantaged accounts (such as IRAs) and prevent older Americans from outliving their assets. Since most Americans need a supplement in addition to the federal Social Security payments, the SECURE Act offers income options to its participants.
Some changes the SECURE Act implemented were:
When a person dies, they may leave their retirement assets to a beneficiary. In the past, the beneficiary could stretch these payments out over their lifetime. But in 2022, an update to the SECURE Act changed that lifetime payout. Now the beneficiary must withdraw the total amount of the account within 10 years from the original owner’s death. This is also called The 10-year Rule.
The update also changed the age when a person must begin drawing the Required Minimum Distribution (RMD) from 72 to 73 years old.
The 2022 update caused a snafu for some retired Americans. Changing the year they must begin withdrawing from their retirement account caused some overlapping taxes for some people. And the new 2023 Update hopes to fix that.
According to the American Academy of Estate Planning Attorneys, the SECURE Act July 2023 Update is aimed at people born in 1951 and received a distribution from January 1, 2023, to July 31, 2023. If you took a lump sum distribution but could not roll it over because it was viewed as an RMD, you now have until September 30, 2023, to roll it over.
As you can see, the tax laws can be confusing. This is why working with an experienced estate planning attorney can help you now and in the long run.
Do you have questions about your IRA inheritance? Choosing an experienced estate planning attorney is important to determine the best decisions concerning your inheritance. To schedule a consultation with the experienced estate planning attorney at Estate and Probate Legal Group, call us at 630-864-5835.
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