What does the SECURE Act mean for you? There were several changes, but we’re talking about the change related to inherited IRAs and what this could mean for your accounts.
(Want to jump ahead in the episode? Click the featured times below to skip to a specific section.)
It’s important to address where you’re saving and why. Some people might just want to know what they are supposed to do, but understanding the “why” is key. Do you know where your money is going and what it will be taxed at when you take it out?
When you save in a pre-tax account you really can’t know what will happen in the future with the taxes owed on it. The tax deduction now may feel good, but it could add up to a large taxable amount later.
The recently passed SECURE Act brought about some major changes. One change includes the RMD age shifting to 72, which allows more time to do Roth conversions. But one of the biggest downsides of the SECURE Act is that it eliminated the stretch IRA, which changes the inheritance.
In the past, the inherited IRA could be stretched out over the lifetime of the heir. But now, the heir has only ten years (with a few exceptions) to withdraw all of the money from the accounts and therefore pay the taxes on it.
It’s worth understanding where your money is going and what the tax implications will be for you and your future heirs later on. You want to avoid paying more in taxes than you have to by thinking strategically now.
Listen to the full episode or click on the timestamps below to hear a specific segment.
[0:16] – Are people putting their money in the wrong place?
[1:50] – What happens when you contribute to a pre-tax IRA?
[3:31] – How has the SECURE Act changed the rules?
[7:00] – What happens with the money passed down to your heirs?
[8:04] – Where are some better places to put your money?
Brian Bowen – Contact