New Retirement Rules

New Retirement Rules
How the IRS is Changing Retirement
(Four key changes)

Change #1:  IRA RMDs
If you are of age 70.5 or higher, it was required that you take a draw from your qualified plan or IRA.  This age has now been raised by the IRS to age 72.  This change offers savers the ability to delay distributions from their IRAs and thus lowering their potential tax liability at a time which they may be on a fixed income.

Change #2:  Inherited IRAs
A significant change to the code was IRS treatment of inherited IRAs.  If you are a non-spouse beneficiary of a deceased person’s IRA, you will now be required to distribute funds from this account over 10 years.  This is a significant change from previous rules that allowed you to “stretch” the distributions over a lifetime.  This change can increase taxes paid on your income over this time.  Exceptions to this include spouses and those beneficiaries who are 10 or fewer years younger than the deceased account owner.

Change #3:  IRA Contributions
IRS rules used to cap the age at which you could make an IRA contribution at 70.5 years of age.  This cap has now been eliminated and may offer older Americans the ability to deposit funds into tax-advantaged IRAs at any age.

Change #4: Annuities in 401k Plans
401k plans have historically avoided annuities due to the lack of insurance protection available.  Recent changes to IRS rules will encourage 401k plan providers to offer annuities to participants - stay tuned!