IRAs and retirement accounts are often a major part of a family’s net worth. Two recent developments — both easy to overlook — are worth a quick check-in.
1. Inherited IRA rules are now being enforced
Most non-spouse beneficiaries who inherited IRAs in 2020 or later must fully distribute the account within 10 years. If the original owner was already taking RMDs, annual distributions during those years may also be required — with penalties for missed withdrawals.
Why this matters: inherited IRAs can trigger unexpected taxable income at exactly the wrong time. And the IRS is now enforcing these rules more strictly.
Wall Street Journal – The Clock Is Ticking for IRA Inheritors to Take
2. Beneficiary forms — not your trust — control retirement accounts
Retirement accounts pass to whoever is listed on the custodian’s beneficiary form. If those forms are outdated or incomplete, the consequences can be significant:
- An unintended person (including an ex-spouse) inherits the account
- The estate becomes the beneficiary, accelerating taxes
- Contingent beneficiaries are missing altogether
Wall Street Journal – Leaving the Wrong Beneficiary on Your IRA Plan Can Be a Costly Mistake
Wall Street Journal – His Ex Is Getting His $1 Million Retirement Account. They Broke Up in 1989.
What to do now
This is exactly the type of coordination the Legacy Program is designed to handle. If you haven’t reviewed these recently, please reach out to our asset-alignment paralegal, Michelle Saye (michelle@kaiserlg.com), to confirm:
- Your IRA / 401(k) beneficiary designations
- That they still reflect your current wishes
- That any inherited retirement accounts are being handled correctly
- That your retirement accounts and estate plan are aligned
If you’ve inherited a retirement account in recent years — or just want reassurance that everything is coordinated — we’re happy to review this with you and your advisors.