What are the New Rules for Inherited IRAs? - YouTube

another piece of news is the irs came with  some more information regarding the going away  

of the stretch ira what i'm talking about is if  you're inheriting an ira and you're not the spouse  

of the deceased so that would be a non-spouse  ira or you might hear me call it a non-spouse  

benny ira benny for beneficiary meaning you're not  the spouse of the person that died so none spouse  

beneficiary the rules went away that you have to  basically take the money out you have 10 years  

to take the money out of it where the old rule is  you could do the stretch and take it take required  

minimum distributions over your lifetime to take  distributions from that account so it was small  

um i'm not it's basically a divisor  not percentage but like if you're  

70 that percentage is a little better than  three and a half percent so if you were 50  

and a benny you know it would be a smaller  percentage of assets in that case but increases  

as you age but what they got to looking at over  time is they took the protections from that  

you know from you know there's if you went  bankrupt or something your ira would be protected  

well they took that away from the non-spouse iras  and then they went back and they looked at it  

again and they said you know what 70 of the people  spend their ira inheritance inside of five years  

you know who keeps them intact the big accounts so  let's put a stop to that so let's have these spent  

down and i know not all of you would do that but  70 go through the money in a short period of time  

and it could be because they want to pay off the  house pay off the credit cards they could be what  

they could well be making really good decisions to  pay off the kids college debt and stuff like that  

so i'm not saying they just you burn through the  money but they're looking at it from standpoint  

it gets spent so they said well heck let's do  away with that rule let's have the 10-year rule  

and even if a kid's the benny once they reach age  of majority their clock starts on the 10-year rule  

so the assumption was year 10 is a 100 percent  rmd meaning year 10 you have to take it all out  

during that year what's the requirement 100 of the  account well now they come back and said no that's  

not quite it the balance does have to be taken  in year 10 but there they said it's going to be  

required minimum distributions each year so we  don't know what that table or clarification is  

but they're saying you're going to have to take  a distribution each year so for a taxable ira  

our thought was why would if you're inheriting  500 000 in an ira and you're not the spouse you  

have to take money out well you sure don't want to  wait to year 10 and do it all at once and have a  

giant tax bill our thought it would be you take  out 25 000 i'm sorry you take out 50 000 a year  

each year and it'd be a little bit more but you  get where i'm going let's spread it out so we're  

not jumping to the highest tax brackets in that  case and kind of do some planning and and maybe  

you need it for income but you say well heck i  don't need that well take some of it for income  

you're going to have to pay taxes and maybe put  that money elsewhere and i'll give you an idea  

of where we could put that but the other thing  that it really impacts is roth accounts that are  

left behind you know those are tax-free accounts  that are left behind because you you can inherit  

an ira but you cannot convert it to a roth but  if old james found went to the doctor you know  

and he has all this money and the doctor tells  them you know james you know i've got some bad  

news well doctor just spit it out what is it well  you don't have long what how long do i have well  

maybe six months cool are you sure about this the  doctor says yeah i'm pretty sure about this this  

way it's gonna go for you i'm sorry he said that's  cool i got some things to do i'll check in with  

you later see if you change your mind whereas  james said it he's headed to gregory's firm to  

call them said look i want to convert my account  to a roth so i can leave it behind tax-free money  

because my kids can't convert it but i can i don't  have long i need to get this done well how are  

you going to pay the taxes i don't know but i'm  going to do it before i die you get so that's the  

power of the wrath but they're saying now they're  telling your kids james you can't keep it forever  

you're gonna have to spend it in 10 years and  you're going to have to take distributions because  

what should james's kids do wait to year  10 to take it out let it double up perhaps  

so okay so so that's kind of where they're kind of  putting the caboose on uh cabish on uh roth iras  

with that kind of rule adjusting or clarifying  that and there's going to be more information to  

come out of that if you've got if any ira you just  prepare to take a distribution this year and you  

should be kind of spreading it over 10 years if  it's roth wait till later in the year and and get  

clarification on that distribution my thought  is if you've got to take out money and you're  

probably needing some of it but we've got to  spread that taxable money over 10 years here's a  

thought i've got a max funding program and we ran  this i think it's you know with north american at  

five plus percent but our thoughts was take  some money for income and do things you need  

pay taxes on that fifty thousand and twenty five  thousand of it put it in the max funding strategy  

why let's create another income source so do that  for 10 years take that distribution wind down  

that ira and at year 11 for this individual and  we'll just call this individual getting the nun  

spouse 60 years old so at age 70 they could start  income from that and that's forecasted to be 24  

little more than 24 000 a year in income so if  we just round it a a little bit you can almost  

call that uh 250 000 a year in income and over  uh 20 years from 70 to ninety you can do the math  

twenty five thousand around which is round you  actually said two fifty but i think everyone knows  

well it's twenty five thousand  a year there you go ten years  

is two hundred fifty thousand twenty  years would be 500 000. so it's 250  

in 500 000 out no taxes on that income with  that max funding strategy if you want more  

ideas like that james will give you a number  to call call gregory rickson associates

504-832-9200 and you can always remember  gregoryrix.com thanks for hanging out with  

us tonight let's do it again tomorrow i'm james  parker we are winning it live with gregory rix