Under the Secure Act, some heirs must deplete inherited retirement accounts within 10 years, facing penalties if they don't. However, to address confusion, the IRS has delayed penalties for missed withdrawals until 2024. While this may seem convenient, it could lead to larger future distributions and higher taxes. Experts advise weighing one's financial situation and considering starting withdrawals now, especially with potential tax bracket changes on the horizon.
When a spouse passes away, the surviving partner may face higher taxes when filing as a single filer. To minimize this "survivor's penalty," consider Roth IRA conversions, reviewing account ownership, and designating beneficiaries to defer taxes. It's crucial to plan ahead to mitigate these financial surprises, especially for older women who often bear the brunt of this tax impact after losing their spouse.
