Congress recently passed the Secure Act which, although it has many positive points, impacts EVERY person with a qualified retirement plan such as an IRA or 401(k). Effective 1/1/2020, with the exception of surviving spouses and certain disabled persons, anyone who inherits funds from a qualified retirement account must withdraw the money over ten years or face a whopping tax bill in year ten or worst yet, be locked out of the account. Under present law, under the “stretch” provisions,  these monies can be rolled to a new IRA with an election to distribute the money over the beneficiaries life expectancy. Thus the annual payments are smaller, possibly extended over a much longer time, with thousands less paid in tax.

For example, assume a wage earner with a 401(k), IRA or similar plan, who wants to bequeath the funds to her children or grandchildren or others (other than their spouse-if married). The 30 year old beneficiary, instead of making an election to spread the distributions and the tax bill over their life expectancy, must now take it over ten years or less, probably paying thousands more in income tax, and possibly risk losing the money remaining if not withdrawn in ten years.

Obviously, it is time to start discussing options with your tax advisor NOW.