Stretch IRAs refer to an estate planning strategy that was utilized to extend the tax-deferred status of an inherited IRA when it passed to a non-spouse beneficiary. Stretched IRAs allowed for continued tax-deferred growth. The SECURE Act, which was passed by the Senate on December 19, 2019, however, will end stretch IRAs.
The most direct impact of this legislation is that it will change how IRAs are administered beginning January 1, 2020, by both eliminating the maximum age at which a person can make contributions to a traditional IRA. This change will also delay the starting date for required maximum distributions from age 70 and a half to 72. It is important for everyone who plans on utilizing an IRA to understand how the changes that will likely occur as a result of the SECURE Act.
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