There are, however, two key provisions that will affect current retirees. The Act changed the age when retirees must start taking Required Minimum Distributions to 72. Secondly, the law eliminated the "stretch" provision of retirement accounts. Under prior law, qualified retirement accounts that were left to one's human beneficiaries could be withdrawn over that beneficiary's life expectancy. This made traditional IRAs very attractive as a retirement tool as the funds could be expected to grow tax-deferred for many decades. However now, unless the beneficiary is the spouse, the funds must be withdrawn over the 10-year period following the death of the owner. This law makes a tax-free Roth IRA even more attractive because now IRA beneficiaries will be receiving much more taxable income over a shorter period, which could push them into a higher federal and state income tax bracket. A Roth IRA does not have a Required Minimum Distributions rule. Therefore, it can grow tax-free undisturbed for the owner's life and the life of their spouse. The surviving spouse can leave it to their children, who can then allow it to continue to grow tax-free for another decade.
With the Tax Cuts and Jobs Act (TCJA), individual tax cuts are set to expire on
Singer Wealth Management
Email: [email protected]
(c)2019 The Palm Beach Post (West Palm Beach, Fla.)
Visit The Palm Beach Post (West Palm Beach, Fla.) at www.palmbeachpost.com
Distributed by Tribune Content Agency, LLC.