Retirement planning and estate planning have both gone through changes in recent years in how people plan for them in Massachusetts. The two often go hand in hand when integrating retirement planning into estate planning where financial issues are concerned. One wants to enjoy retirement but may also wish to leave a certain amount for children or grandchildren. One vehicle that has been used to accomplish this is the IRA account.
A new law, known as the Setting Every Community Up for Retirement Enhancement Act (SECURE Act), changes the way some IRA accounts can be distributed. Prior to the law, IRA accounts could be left to one’s heirs and they were able to take a minimum required distribution that allowed them to stretch the IRA account out over an extended period of time. This also allowed for stretching out the tax payments due on the account. In most cases under the SECURE Act, full distribution must be taken, and taxes paid, within 10 years of inheriting the account.
There are alternatives that can help defray the costs. One of these is a Roth IRA. It does not typically allow for deferred taxes so that while the distribution may still be subject to the 10-year time limit, the taxes may already have been paid. Converting to a Roth IRA can be done gradually over time to defray the tax expense.
Preserving wealth accumulated over a lifetime is often one goal of estate planning in Massachusetts. Familiarity with all of the available options can be difficult to attain. Consulting with a knowledgeable estate planning attorney can help one determine options that best fit a person’s needs.