IRS shifting again - inherited IRA

[lawnchairboy]

IRS Nixes 10-Year Stretch For Most Inherited IRAs (forbes.com)

 

 

 

[randy]

yes I saw that, but I have high hopes for the greed of our congress and the RMD starting at 72 years old will be moved to 75 years old.  My wife is 3 years younger than me, so we had already put the bulk of our IRA monies into her name, so another 3 years on top of that would be great.   

[Red]

15 hours ago, randy said:

yes I saw that, but I have high hopes for the greed of our congress and the RMD starting at 72 years old will be moved to 75 years old.  My wife is 3 years younger than me, so we had already put the bulk of our IRA monies into her name, so another 3 years on top of that would be great.   

The change to 75 for required min distributions will be phased in over 10 years.  It moves from the current 72 years to 73 in year one.  Then slooowly gets to 75 over the remaining 9 years.  Sort of like moving the goal posts. 

[John Ranalletta]

This certainly impacts inheritance issues.  Our CPA recently advised us to name specific beneficiaries for our deferred accounts rather than them pour over into our family trust.  I wondering if leaving them to our grand kids makes sense as their tax brackets are certainly lower than their parents.  Dunno...

[Rinkydink]

20 hours ago, randy said:

 My wife is 3 years younger than me, so we had already put the bulk of our IRA monies into her name, so another 3 years on top of that would be great.   

Did you just make her primary beneficiary or actually transfer to her name? I would think she would have to pay taxes when you put it in her name without you actually passing away. Akin to changing your traditional IRA to a Roth IRA. 

[Patallaire]

On 4/9/2022 at 8:13 AM, John Ranalletta said:

I wondering if leaving them to our grand kids makes sense as their tax brackets are certainly lower than their parents.  Dunno...

They don't need to take it out over 10 years is they are under 21. After they turn 21 they have 10 years.  Your wife will only need to take RMD's based on her age. So to answer your question, if your wife doesn't need the IRA money and at her death you were going to leave it to the kids anyway, then it might be a good strategy, even naming the kids as partial primary beneficiaries. Your wife will only need to take RMD's based on her age she does not need to deplete the account over 10 years. Trusts are non-living entities and even in a pass through the money needs to be depleted over 10 years. 

 

On 4/9/2022 at 4:05 AM, Red said:

The change to 75 for required min distributions will be phased in over 10 years. 

This is a false positive.  While you can wait once it is phased in, the RMD amount is actuarily moved so teh withdrawal{ read taxable income} is higher which impacts teh taxes on your Social Security and could impact your Medicare costs. If you "Moved" the IRAs into your wife's name, that would be a distribution and fully taxable. On the other hand if you made maximum contributions to her account not yours and it was fine and the RMD's will be based on her age.  Income taxes will be on Marital income as will Medicare costs.