LOS ANGELES, Nov. 6, 2019 /PRNewswire/ -- In May of this year and by a vote of 417-3, the House passed H.R. 1994, the "Setting Every Community Up for Retirement Enhancement" (SECURE) Act of 2019. Though the title may ostensibly give you a warm and fuzzy, upon closer examination you may very well realize that it could reduce the value of all retirement savings plans. One provision in particular allows Congress to kill the stretch IRA, which Democrats want because the end effect is to get more money into government coffers sooner. Currently, a stretch IRA permits savers to leave their retirement accounts to children, grandchildren or other beneficiaries, such that recipients can parcel out required minimum distributions over the beneficiary's actuarial lifetime.
Once signed by the President the SECURE Act will reduce saved amounts that can be passed along, such that the inherited benefits will not be free to grow as they have in the past, because smaller initial amounts will detract from the previously enjoyed power of tax-deferred compounding. SECURE will give non-spouse beneficiaries a maximum of 10 years to pull out all the money in an inherited IRA. The result will be the government getting more taxes and sooner, while beneficiaries will be subjected to higher taxes sooner, as distributions are made in large chunks and typically during a higher taxation period than a beneficiary would normally elect. It's estimated that one third more of an inherited IRA could be consumed by taxes, rather than under current IRS rules.
Just as an example, if a high-earning adult (non-spouse) beneficiary received a $1 million dollar inherited IRA they'd be required to take an annual distribution of $100,000. If they live in a high-tax state, their income plus the distribution could easily result in half of the inherited payout being eaten by taxes. In addition, when the Tax Cuts and Jobs Act expires in 2025, taxes will rise across the board and such inherited funds could be consumed at an even greater rate. All of these factors make physical precious metal ownership an even more important consideration than ever before, due to its stellar track record of long-term appreciation, value storage, and asset protection. American Bullion was a pioneer in precious metal IRA's and continues to assist investors in today's rapidly changing retirement landscape.
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SOURCE American Bullion
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