If you're inheriting an IRA through a trust soon, you should take note.
Beneficiaries of individual retirement accounts may not see their inheritances for a decade under the newly passed SECURE Act, and when they do get the money, they may be taxed heavily for it.
After the 10th year, any money that is left must be taken and the account closed, regardless of the tax consequences.This provision can be especially dangerous for people who are inheriting an IRA through a trust, said Jamie Hopkins, director of retirement research at wealth management firm Carson Group in Omaha, Neb.
The only technical required minimum distribution is after the 10th year, which would be the remaining balance. In the case of an inherited IRA through a trust, that would be the entire amount, with no opportunity to take out money during the 10-year wait. The elimination of the stretch IRA alone has the potential to generate about $15.7 billion in tax revenue over the next decade, according to the Congressional Research Service. The SECURE Act as a whole is expected to generate $16.4 billion over the next 10 years. Other provisions of the law include allowing employers to more freely offer annuities as options in a 401 and expanding access to retirement plans for small business workers.There are exceptions to the new drain-in-10 rule.
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