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What to Know Before You Inherit an IRA

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Individual retirement accounts represent an important part of the legacy many of us intend to pass on, but inheriting an IRA presents challenges that demand adequate planning and strategies. Notably, the SECURE Act and, more recently, SECURE 2.0 Act have ushered in sweeping changes to retirement and estate planning, especially for those inheriting retirement accounts.

Under the new rules, most IRAs inherited by non-spouse beneficiaries must be cleaned out within 10 years of the original owner’s death. Previously, beneficiaries could “stretch” their distributions over their lifetimes, potentially lowering their tax obligations. This end to the “stretch IRA” strategy means you need a more calculated approach to managing any inherited funds.

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