Congress Updates Retirement Funding Rules
With the stroke of a pen, Congress can essentially do whatever they want, and they have again. But this time, in a pretty good way.
Within the massive 643 page spending bill that was recently passed, there were a couple of updated provisions regarding retirement funding:
- The age limit for contributing to an IRA has been lifted. It used to be that you could no longer contribute to your retirement after the age of 70 ½.
- The age for Required Minimum Distributions was raised to age 72, up from age 70 ½, allowing your account to grow tax-deferred for an extra 18 months.
Not All News is Good News
New rules were passed regarding inherited IRAs. Under the old law, you could bequeath your IRA to your heirs when you pass away and they had the option of stretching out those distributions over the course of their entire lives. From now on, virtually all inherited IRAs must be fully distributed within 10 years, which will likely trigger a larger tax impact on the beneficiary.
Just like in life, we take the good with the bad. The tough part is that the rules can change at any time, potentially wrecking years of astute planning.
As always, if you have any questions, please don’t hesitate to contact us.