If you’ve saved a lot for retirement, or your parents have, you could be affected by recent changes in the rules about retirement distributions.
The recently enacted Secure Act eliminated the “stretch IRA,” a strategy used by affluent investors to pass tax-advantaged money to their heirs. The stretch IRA allowed nonspouse beneficiaries — typically children and grandchildren — to take money out of an inherited IRA gradually over their lifetimes. The new law requires most IRAs inherited by people other than spouses to be drained within 10 years, which can lead to much higher tax bills for heirs. (Spouses still have the option of treating an inherited IRA as their own and taking money out over their lifetimes.)