September 22, 2020
Update to Inherited Account Guidelines
An important update as a result of the SECURE Act.
As a result of the SECURE Act, when inheriting an IRA or qualified plan from a non-spouse after January 1, 2020, the money must now be paid out within 10 years. There are notable exceptions to this new rule, as the inherited IRA rules have different options for the following beneficiaries (known as designated eligible beneficiaries):
- Spouse of the deceased
- A beneficiary who has a disability or chronic illness
- A beneficiary who is not more than 10 years younger than the deceased IRA owner
- A minor child – special provisions apply
Any other beneficiary is considered a designated non eligible beneficiary.
National Life is open to having new policies issued that will help accommodate the new 10 year distribution guideline for designated non eligible beneficiaries. In order to allow this practice to continue the following guidelines will become effective October 5, 2020.
- FIT Horizon Growth is the only permitted product
- Commissions will be reduced by 35%
- A non eligible beneficiary distribution form (form 53712) must be submitted with the application
For information and rules on all beneficiary polices, please click here for the “Setting Up an Inherited Account” brochure.
The companies of National Life Group® and their representatives do not offer tax or legal advice. Please encourage your clients to seek tax or legal advice from their appropriate professional advisor.
