1 00:00:40,979 --> 00:00:48,450 Suze: September 1st. Oh my God. September 1st 2024. Welcome everybody 2 00:00:48,459 --> 00:00:51,379 Suze: to the Women and Money podcast as well as everybody 3 00:00:51,389 --> 00:00:58,220 Suze: smart enough to listen, Suze O, here and today obviously 4 00:00:58,240 --> 00:01:04,449 Suze: is Suze School. But before I begin Suze School, I 5 00:01:04,459 --> 00:01:07,199 Suze: really have to commemorate today 6 00:01:07,800 --> 00:01:10,290 Suze: because one year ago today, 7 00:01:11,150 --> 00:01:17,080 Suze: our very, very good friend, Jimmy Buffett passed away and 8 00:01:17,089 --> 00:01:19,400 Suze: many of you wrote and said that you were so 9 00:01:19,410 --> 00:01:23,739 Suze: surprised that you never heard me say anything or talk 10 00:01:23,750 --> 00:01:28,160 Suze: about it. And honestly, it's because it was too painful, 11 00:01:28,349 --> 00:01:31,900 Suze: it was too painful to even think about. And as 12 00:01:31,910 --> 00:01:35,500 Suze: I'm recording this, his daughter, Savannah Buffett 13 00:01:35,919 --> 00:01:39,500 Suze: and her husband, Josh happened to be here on the 14 00:01:39,510 --> 00:01:44,290 Suze: island because this was one of Jimmy's absolute favorite place 15 00:01:44,300 --> 00:01:49,050 Suze: to be. And I would ask Savannah to come on 16 00:01:49,059 --> 00:01:54,059 Suze: the podcast and say something, but it's still too, too 17 00:01:54,069 --> 00:01:56,580 Suze: painful for herself as well. 18 00:01:57,269 --> 00:02:00,129 Suze: So today is a very incredible day 19 00:02:00,989 --> 00:02:07,089 Suze: and a day that physically ended a life one year ago, 20 00:02:07,839 --> 00:02:12,850 Suze: but a memory of a man and his songs and 21 00:02:12,860 --> 00:02:17,809 Suze: his joy and his parrot heads and his Margaritaville that 22 00:02:17,820 --> 00:02:23,329 Suze: will go on forever and a day, Jimmy, what can 23 00:02:23,339 --> 00:02:28,728 Suze: I say? Boyfriend? Um What can I say? But in 24 00:02:28,740 --> 00:02:34,000 Suze: that topic as well, I just wanna say that about 25 00:02:34,008 --> 00:02:35,529 Suze: a week or so ago, 26 00:02:36,038 --> 00:02:38,490 Suze: a woman by the name of Ruth sent in an 27 00:02:38,500 --> 00:02:44,770 Suze: email and she said the following said Suze, I'm finding 28 00:02:44,779 --> 00:02:49,049 Suze: your podcast very depressing because all you do is talk 29 00:02:49,059 --> 00:02:54,038 Suze: about death. Can't you talk about life or something else 30 00:02:54,050 --> 00:02:55,329 Suze: or whatever she said. 31 00:02:56,309 --> 00:03:00,600 Suze: And I simply wrote her back one little line. That 32 00:03:00,610 --> 00:03:06,000 Suze: death is a part of living. It just is whether 33 00:03:06,008 --> 00:03:08,919 Suze: you know it or not and not one of us 34 00:03:08,929 --> 00:03:10,919 Suze: can escape that. 35 00:03:11,630 --> 00:03:17,880 Suze: But what makes death for me so sad is when 36 00:03:17,889 --> 00:03:21,079 Suze: there hasn't been planning done for it. 37 00:03:22,029 --> 00:03:25,619 Suze: So, yeah, I spend a lot of time talking about it, 38 00:03:25,699 --> 00:03:29,829 Suze: knowing the rules, understanding why you need a will, understanding 39 00:03:29,839 --> 00:03:32,070 Suze: why a will is never enough. And you also need 40 00:03:32,080 --> 00:03:35,380 Suze: a living revocable trust, an advanced directive and durable power 41 00:03:35,389 --> 00:03:38,350 Suze: of attorney for health care and a financial durable power 42 00:03:38,360 --> 00:03:43,570 Suze: of attorney. Why you need to know many, many things, 43 00:03:43,580 --> 00:03:47,009 Suze: especially as you get older, 44 00:03:47,600 --> 00:03:52,500 Suze: how to take money, not only out of a retirement account, 45 00:03:52,649 --> 00:03:57,770 Suze: but especially if you die and it's not an if 46 00:03:57,779 --> 00:04:00,899 Suze: it's a win, what's gonna happen to that money that's 47 00:04:00,910 --> 00:04:04,979 Suze: in your retirement account because probably for the majority of you, 48 00:04:05,690 --> 00:04:09,580 Suze: the most money that you have, forget your home, the 49 00:04:09,589 --> 00:04:14,789 Suze: most money, liquid money that you have is in your 50 00:04:14,800 --> 00:04:21,229 Suze: retirement accounts. And now that the Secure Act 2.0 has 51 00:04:21,238 --> 00:04:26,959 Suze: been finalized, the regulations for it. It is essential that 52 00:04:26,970 --> 00:04:31,760 Suze: you know, that your beneficiaries know the correct way to 53 00:04:31,769 --> 00:04:34,950 Suze: take money from a retirement account 54 00:04:35,600 --> 00:04:40,260 Suze: that they have inherited because it is no longer like 55 00:04:40,269 --> 00:04:43,820 Suze: it used to be. And in 2020 if you died, 56 00:04:43,829 --> 00:04:45,328 Suze: then or after 57 00:04:46,190 --> 00:04:53,589 Suze: everything has changed. So today is going to be 58 00:04:54,350 --> 00:05:01,309 Suze: the start of part one of the final master class 59 00:05:01,500 --> 00:05:07,130 Suze: on inheriting pre-tax retirement accounts. 60 00:05:08,040 --> 00:05:11,779 Suze: There will be a part two, you'll participate in part 61 00:05:11,790 --> 00:05:14,529 Suze: two and I'll tell you how in a little bit, 62 00:05:14,809 --> 00:05:18,738 Suze: but this will be the master class because the final 63 00:05:18,750 --> 00:05:24,779 Suze: regulations are in. And so anything I've told you about 64 00:05:24,790 --> 00:05:30,019 Suze: it before, even though it's been correct, this now is 65 00:05:30,029 --> 00:05:33,040 Suze: absolutely what you need to know. 66 00:05:33,660 --> 00:05:38,559 Suze: So, are you ready to take out your Suze notebooks? 67 00:05:38,570 --> 00:05:40,700 Suze: Which you should absolutely do 68 00:05:41,350 --> 00:05:45,690 Suze: and get ready for part one of the master class 69 00:05:45,700 --> 00:05:51,570 Suze: on pre-tax traditional retirement accounts. 70 00:05:52,529 --> 00:05:53,349 Suze: All right. 71 00:05:54,130 --> 00:05:57,868 Suze: So to begin with, I'm going to do a refresher 72 00:05:57,880 --> 00:06:02,649 Suze: of all the different categories that people who can inherit 73 00:06:02,660 --> 00:06:06,630 Suze: in IRA. And when I say IRA, I also mean 74 00:06:06,660 --> 00:06:08,600 Suze: a 401k, a 403bs, TSPs. 75 00:06:10,640 --> 00:06:15,320 Suze: But chances are you are going to want to, if 76 00:06:15,329 --> 00:06:20,589 Suze: somebody has money in a planned retirement account, meaning a 77 00:06:20,600 --> 00:06:25,500 Suze: 401k 403b or TSP, chances are you are going to 78 00:06:25,510 --> 00:06:30,320 Suze: absolutely want to take that money and roll it over 79 00:06:30,589 --> 00:06:35,618 Suze: into an inherited IRA. So if it's ok, 80 00:06:36,428 --> 00:06:39,510 Suze: I'm just going to refer to all plans now as 81 00:06:39,519 --> 00:06:44,200 Suze: an IRA. Ok, so again to pick up where I 82 00:06:44,209 --> 00:06:48,450 Suze: just left off, I wanna do a refresher of all 83 00:06:48,459 --> 00:06:54,369 Suze: the different categories that people who inherit an IRA fall into. 84 00:06:54,380 --> 00:07:01,399 Suze: Especially remember I'm now talking about pre tax retirement accounts. 85 00:07:02,339 --> 00:07:03,558 Suze: As you know, 86 00:07:04,299 --> 00:07:06,440 Suze: when you have a retirement account, 87 00:07:07,250 --> 00:07:12,670 Suze: you have to designate who you want to receive that 88 00:07:12,679 --> 00:07:15,359 Suze: retirement account in case you die. 89 00:07:16,059 --> 00:07:21,279 Suze: So it is a beneficiary, which is why throughout this, 90 00:07:21,290 --> 00:07:27,600 Suze: you're going to hear me talk about designated beneficiaries because 91 00:07:27,609 --> 00:07:31,640 Suze: those are the people that you have designated in most 92 00:07:31,649 --> 00:07:37,179 Suze: cases as to who is going to get your retirement account. 93 00:07:39,170 --> 00:07:45,470 Suze: Next. You need to know that some designated beneficiaries have 94 00:07:45,480 --> 00:07:53,679 Suze: more privileges than other designated beneficiaries. And therefore, we're gonna 95 00:07:53,690 --> 00:07:59,890 Suze: have two categories of beneficiaries. The very first one that 96 00:07:59,899 --> 00:08:06,170 Suze: has more privileges are known as eligible, designated beneficiaries 97 00:08:06,690 --> 00:08:11,359 Suze: to break those three words down. Very simply, it's your 98 00:08:11,369 --> 00:08:18,429 Suze: designated beneficiaries that are eligible for more withdrawal privileges than 99 00:08:18,440 --> 00:08:20,510 Suze: anybody else. Ok. 100 00:08:21,299 --> 00:08:29,160 Suze: Now who is qualified as an eligible designated beneficiary? 101 00:08:30,350 --> 00:08:35,609 Suze: Number one, a surviving spouse, your surviving spouse has the 102 00:08:35,619 --> 00:08:41,549 Suze: most privileges of any other beneficiary. You can leave your 103 00:08:41,559 --> 00:08:46,090 Suze: money to and that a surviving spouse can take over 104 00:08:46,099 --> 00:08:49,849 Suze: your retirement account as if it was their own. They 105 00:08:49,859 --> 00:08:53,440 Suze: have all the benefits in the world. So we're not 106 00:08:53,450 --> 00:08:59,929 Suze: worried about surviving spouses. But the four other categories 107 00:09:00,710 --> 00:09:07,199 Suze: of an eligible designated beneficiary is a minor child of 108 00:09:07,210 --> 00:09:13,289 Suze: the decedent, not just any minor child, but it has 109 00:09:13,299 --> 00:09:18,169 Suze: to be a minor child of the decedent, the owner 110 00:09:18,179 --> 00:09:22,849 Suze: of the retirement account, very, very important. 111 00:09:23,650 --> 00:09:28,330 Suze: The next category is people, doesn't have to be a relative, 112 00:09:28,700 --> 00:09:32,569 Suze: but any person that you have left as a beneficiary 113 00:09:32,719 --> 00:09:38,979 Suze: who is less than 10 years younger than the decedent 114 00:09:39,359 --> 00:09:41,979 Suze: or older than the decedent. 115 00:09:42,640 --> 00:09:47,619 Suze: So you have a decedent who named their best friend 116 00:09:47,809 --> 00:09:53,419 Suze: as a beneficiary. The decedent was 80 years of age 117 00:09:53,429 --> 00:09:58,260 Suze: when the decedent died. The beneficiary, his best friend is 118 00:09:58,270 --> 00:10:03,718 Suze: maybe 75 which is less than 10 years younger than 119 00:10:03,729 --> 00:10:05,479 Suze: the decedent or 120 00:10:06,229 --> 00:10:10,209 Suze: the decedent is 80 years of age, left his best 121 00:10:10,219 --> 00:10:10,890 Suze: friend 122 00:10:11,679 --> 00:10:17,699 Suze: as beneficiary and his best friend is 82 years of age. 123 00:10:19,349 --> 00:10:25,280 Suze: It's in those circumstances that that person is an eligible 124 00:10:25,400 --> 00:10:28,440 Suze: designated beneficiary. 125 00:10:29,690 --> 00:10:34,409 Suze: People who are chronically ill and I will get more 126 00:10:34,419 --> 00:10:37,869 Suze: into that later on as to how do you verify 127 00:10:37,880 --> 00:10:42,238 Suze: that you are chronically ill and things like that as 128 00:10:42,250 --> 00:10:47,119 Suze: well as the fourth category you are disabled 129 00:10:48,349 --> 00:10:51,849 Suze: again later on. I'll tell you all about that. 130 00:10:52,880 --> 00:10:55,030 Suze: Those are the people 131 00:10:55,750 --> 00:11:05,039 Suze: that are eligible, designated beneficiaries, but most people, everyone who 132 00:11:05,049 --> 00:11:09,200 Suze: is a non spouse most likely, which will be the 133 00:11:09,210 --> 00:11:16,830 Suze: majority of you are non eligible designated beneficiaries. But these 134 00:11:16,840 --> 00:11:19,520 Suze: people are not eligible 135 00:11:20,640 --> 00:11:25,849 Suze: for the benefits that the people I just named are 136 00:11:25,859 --> 00:11:27,169 Suze: eligible for. 137 00:11:28,000 --> 00:11:31,900 Suze: What you need to know. Is that how one withdraws 138 00:11:31,909 --> 00:11:38,329 Suze: money from a retirement account that they have inherited is 139 00:11:38,340 --> 00:11:45,859 Suze: determined by your status. You are either an eligible designated 140 00:11:45,869 --> 00:11:46,979 Suze: beneficiary 141 00:11:47,659 --> 00:11:53,080 Suze: or you are a non eligible, designated beneficiary. 142 00:11:54,039 --> 00:11:56,348 Suze: Makes sense. Ok. 143 00:11:57,140 --> 00:12:01,119 Suze: The next factor that you need to know they've made 144 00:12:01,130 --> 00:12:04,320 Suze: this so difficult, I can't even stand it, but it 145 00:12:04,330 --> 00:12:08,919 Suze: is now the law. So you have to know this. 146 00:12:09,809 --> 00:12:13,780 Suze: Now, there is a second factor that is equally as 147 00:12:13,789 --> 00:12:20,190 Suze: important that will determine how you must withdraw money from 148 00:12:20,200 --> 00:12:23,109 Suze: an inherited IRA. 149 00:12:23,960 --> 00:12:27,460 Suze: And it is this put a pin in that for 150 00:12:27,469 --> 00:12:34,400 Suze: a second, you all know about required minimum distributions. You 151 00:12:34,409 --> 00:12:40,210 Suze: all know that once you turn 73 right now, 152 00:12:41,140 --> 00:12:47,280 Suze: that's when supposedly you need to start taking out required 153 00:12:47,289 --> 00:12:53,169 Suze: minimum distributions from your pre-tax retirement IRA. 154 00:12:54,570 --> 00:13:01,280 Suze: However, there's also something known as a required beginning date, 155 00:13:01,289 --> 00:13:08,750 Suze: the RBDs where you are not required to take out 156 00:13:08,760 --> 00:13:13,429 Suze: your distribution in the year that you turned 73 157 00:13:14,400 --> 00:13:20,039 Suze: but you are required to begin those distributions by April 158 00:13:20,049 --> 00:13:26,479 Suze: 1st of the year after you turned 73. So let's 159 00:13:26,489 --> 00:13:30,020 Suze: say you turned 73 this year like I did. 160 00:13:30,780 --> 00:13:36,039 Suze: Now, it makes tax sense to absolutely take out my 161 00:13:36,049 --> 00:13:40,520 Suze: required minimum distribution at the end of this year. But 162 00:13:40,530 --> 00:13:45,200 Suze: that required minimum distribution will be based on the ending 163 00:13:45,210 --> 00:13:52,369 Suze: balance of my IRA as of December 31st 2023. So 164 00:13:52,380 --> 00:13:54,559 Suze: I will take out money. Now, 165 00:13:55,130 --> 00:14:02,179 Suze: however, my required beginning date to take out that required 166 00:14:02,190 --> 00:14:05,750 Suze: minimum distribution is April 1st 167 00:14:06,929 --> 00:14:09,340 Suze: of the year after 168 00:14:10,000 --> 00:14:15,030 Suze: I turned 73. So I really do not have to 169 00:14:15,039 --> 00:14:23,159 Suze: take out my RMDs until April 1st of 2025. Now, 170 00:14:23,169 --> 00:14:26,530 Suze: the reason that I don't want to wait is if 171 00:14:26,539 --> 00:14:30,659 Suze: I postpone my RMD until 2025 172 00:14:31,150 --> 00:14:35,330 Suze: I still have to take out another RMD for the 173 00:14:35,340 --> 00:14:40,979 Suze: year 2025. So it never ever, in most cases makes 174 00:14:40,989 --> 00:14:45,650 Suze: sense to defer it till April 1st of the year 175 00:14:46,150 --> 00:14:49,330 Suze: after you have turned 73. 176 00:14:50,520 --> 00:14:54,390 Suze: So the question has to be, why do you need 177 00:14:54,400 --> 00:15:01,859 Suze: to know that? Because when you inherit a pre-tax retirement account, 178 00:15:02,750 --> 00:15:05,299 Suze: you need to know if the decedent 179 00:15:06,140 --> 00:15:14,590 Suze: was required to be taking their RMDs. So were they, 180 00:15:14,599 --> 00:15:19,710 Suze: did they die on or after their RBD date? Their 181 00:15:19,719 --> 00:15:24,309 Suze: required beginning date? If the answer to that is yes, 182 00:15:24,320 --> 00:15:28,469 Suze: you fall into a whole different category. If the answer 183 00:15:28,479 --> 00:15:34,349 Suze: to that question is no, they died before their RBD, 184 00:15:35,400 --> 00:15:39,539 Suze: then you fall into a different category. 185 00:15:40,270 --> 00:15:46,080 Suze: So let's just try to break this down first. I 186 00:15:46,090 --> 00:15:48,969 Suze: want you to ask yourself two questions. 187 00:15:49,919 --> 00:15:59,010 Suze: Are you ineligible, designated beneficiary or not? Yes or no. So, 188 00:15:59,020 --> 00:16:03,979 Suze: are you a surviving spouse, a minor child of the decedent? 189 00:16:04,460 --> 00:16:08,359 Suze: Are you less than 10 years younger than the decedent 190 00:16:08,440 --> 00:16:12,659 Suze: or possibly older than the decedent? Are you chronically ill 191 00:16:12,669 --> 00:16:17,640 Suze: or are you disabled? Circle yes or no. 192 00:16:18,289 --> 00:16:19,630 Suze: Second question. 193 00:16:20,280 --> 00:16:27,859 Suze: Did the decedent die before their required beginning date? Remember 194 00:16:28,219 --> 00:16:32,859 Suze: the required beginning date is April 1st after the year 195 00:16:33,630 --> 00:16:37,280 Suze: when the decedent turned 73. 196 00:16:38,130 --> 00:16:39,809 Suze: Yes or no. 197 00:16:40,909 --> 00:16:45,109 Suze: Now listen to me closely here because this is really 198 00:16:45,140 --> 00:16:48,010 Suze: where it gets interesting. 199 00:16:48,820 --> 00:16:50,690 Suze: I am 73. 200 00:16:51,429 --> 00:16:57,530 Suze: I am choosing to take out my required minimum distribution 201 00:16:57,539 --> 00:17:02,090 Suze: this year. But my required beginning date 202 00:17:02,900 --> 00:17:09,880 Suze: is not till April 1st of next year, 2025. If 203 00:17:09,890 --> 00:17:12,030 Suze: I died this year. 204 00:17:12,890 --> 00:17:19,119 Suze: If I died in January, February March of next year, 205 00:17:19,569 --> 00:17:23,290 Suze: even if I took out my RMDs, 206 00:17:25,198 --> 00:17:30,899 Suze: I died before my required beginning date. 207 00:17:31,829 --> 00:17:32,969 Suze: Therefore, 208 00:17:33,670 --> 00:17:40,530 Suze: if the decedent dies before their required beginning date, even 209 00:17:40,760 --> 00:17:43,679 Suze: if they had taken out RMDs, 210 00:17:45,920 --> 00:17:50,670 Suze: then the answer to the question, did the decedent die 211 00:17:50,680 --> 00:17:53,339 Suze: before the required beginning date 212 00:17:54,290 --> 00:18:00,130 Suze: matters? So if they did, then you put, yes. If 213 00:18:00,140 --> 00:18:02,510 Suze: they did not, you put no. 214 00:18:03,800 --> 00:18:09,729 Suze: Also remember everybody starting in 2035 RMDs will start at 215 00:18:09,739 --> 00:18:12,819 Suze: the age of 75. OK. 216 00:18:13,650 --> 00:18:19,130 Suze: So if you answered yes to the first question, remember 217 00:18:19,140 --> 00:18:22,910 Suze: what that first question was. Am I an eligible designated 218 00:18:22,920 --> 00:18:28,069 Suze: beneficiary if you answered yes to that question. 219 00:18:28,729 --> 00:18:33,669 Suze: And if you answered yes to the second question as well, 220 00:18:34,260 --> 00:18:38,589 Suze: which was, do you remember, did the decedent die before 221 00:18:38,599 --> 00:18:41,310 Suze: their required beginning date? 222 00:18:42,199 --> 00:18:48,319 Suze: If you answered yes to both those questions, then you 223 00:18:48,329 --> 00:18:52,959 Suze: have the ability to absolutely choose what you want to 224 00:18:52,969 --> 00:18:56,409 Suze: do with the inherited IRA. 225 00:18:57,010 --> 00:19:00,010 Suze: You don't have to worry about all the things that 226 00:19:00,020 --> 00:19:04,219 Suze: I'm about to talk about. You have the ability to 227 00:19:04,229 --> 00:19:10,819 Suze: stretch your distributions over your entire life expectancy. If you 228 00:19:10,829 --> 00:19:14,869 Suze: want to do that, you get to do what you 229 00:19:14,880 --> 00:19:18,770 Suze: used to be able to do prior to 2020 when 230 00:19:18,780 --> 00:19:20,859 Suze: the Secure Act came into play. 231 00:19:21,640 --> 00:19:27,109 Suze: So you have all these choices, you can stretch your 232 00:19:27,119 --> 00:19:32,530 Suze: distributions over your entire life expectancy, which is a big deal, 233 00:19:32,540 --> 00:19:38,188 Suze: especially if you are younger. Now, remember just because you 234 00:19:38,199 --> 00:19:43,500 Suze: may choose to stretch your distributions based on your life expectancy. 235 00:19:43,640 --> 00:19:46,599 Suze: If you need more money than that, you can take 236 00:19:46,609 --> 00:19:48,659 Suze: it out at any time you want. 237 00:19:49,199 --> 00:19:53,659 Suze: But you are simply able to do something that the 238 00:19:53,670 --> 00:19:59,430 Suze: majority of the people inheriting money besides a spouse, obviously 239 00:19:59,560 --> 00:20:02,260 Suze: can no longer do 240 00:20:03,280 --> 00:20:04,468 Suze: fabulous, right? 241 00:20:05,319 --> 00:20:12,099 Suze: So if you are an eligible designated beneficiary and the 242 00:20:12,109 --> 00:20:17,969 Suze: decedent died on or before the required beginning date, besides 243 00:20:17,979 --> 00:20:22,139 Suze: being able to stretch it over your entire lifetime, which again, 244 00:20:22,150 --> 00:20:24,140 Suze: the majority of you will choose 245 00:20:24,900 --> 00:20:26,660 Suze: for whatever reason 246 00:20:27,380 --> 00:20:30,739 Suze: you don't wanna do that, you don't have to, you 247 00:20:30,750 --> 00:20:35,760 Suze: then just abide by the 10 year rule, which says 248 00:20:36,410 --> 00:20:39,660 Suze: the money has to be wiped clean in the 10th 249 00:20:39,670 --> 00:20:44,170 Suze: year after death. If somebody died, that left you, the 250 00:20:44,180 --> 00:20:49,849 Suze: inherited IRA in the year 2020 it has to be 251 00:20:49,859 --> 00:20:52,880 Suze: wiped clean by 2030. 252 00:20:53,650 --> 00:20:59,639 Suze: If somebody left you an inherited IRA in 2024 this year, 253 00:20:59,650 --> 00:21:06,389 Suze: it's gotta be wiped clean by 2034. If you choose 254 00:21:06,400 --> 00:21:12,189 Suze: that method, the great part about being an eligible designated 255 00:21:12,199 --> 00:21:13,420 Suze: beneficiary 256 00:21:13,780 --> 00:21:19,560 Suze: whose decedent died prior to the RBD date is, you 257 00:21:19,630 --> 00:21:23,659 Suze: get to choose which one of those methods you wanna 258 00:21:23,670 --> 00:21:26,839 Suze: do tremendous advantage. 259 00:21:27,709 --> 00:21:34,329 Suze: However, if you answered, yes, listen closely. Now, if you 260 00:21:34,339 --> 00:21:38,849 Suze: answered yes, that you are an eligible designated beneficiary. 261 00:21:39,689 --> 00:21:44,270 Suze: But no to the second question, meaning that the decedent 262 00:21:44,280 --> 00:21:48,089 Suze: did die on or after the RBD date, 263 00:21:48,739 --> 00:21:54,969 Suze: then ready, you only have one choice mandatory. You have 264 00:21:54,979 --> 00:21:56,189 Suze: to stretch 265 00:21:56,900 --> 00:22:03,000 Suze: the distributions over the longer of the beneficiary's life or 266 00:22:03,010 --> 00:22:09,790 Suze: the decedent's life. If the decedent had already started taking 267 00:22:10,530 --> 00:22:13,989 Suze: RMDs after the RBD date 268 00:22:14,619 --> 00:22:20,718 Suze: and leaves the IRA to somebody who's younger than the decedent, 269 00:22:21,900 --> 00:22:27,520 Suze: then that beneficiary has to stretch the distributions over their 270 00:22:27,530 --> 00:22:29,319 Suze: life because it's longer. 271 00:22:30,189 --> 00:22:36,169 Suze: However, let's say the decedent was 35 years of age 272 00:22:36,810 --> 00:22:39,530 Suze: or 80 years of age or whatever 273 00:22:40,400 --> 00:22:45,099 Suze: and left it to somebody who's 90 years of age, 274 00:22:45,109 --> 00:22:49,300 Suze: then that beneficiary would have to stretch it over the 275 00:22:49,310 --> 00:22:52,890 Suze: decedent's life span. So again, 276 00:22:53,839 --> 00:22:57,180 Suze: if you are an eligible designated beneficiary 277 00:22:58,060 --> 00:23:02,479 Suze: and the decedent died on or after the required beginning date, 278 00:23:03,290 --> 00:23:07,660 Suze: then the beneficiary has to stretch it over the longer 279 00:23:07,979 --> 00:23:14,589 Suze: whichever is longer of the beneficiary's life or the decedent's life. 280 00:23:15,599 --> 00:23:21,760 Suze: So next, if you answer no to both questions, one 281 00:23:21,770 --> 00:23:27,819 Suze: and two, you're a non eligible designated beneficiary where the 282 00:23:27,829 --> 00:23:28,829 Suze: decedent 283 00:23:29,750 --> 00:23:37,489 Suze: died prior to the RBD, the required beginning date, then 284 00:23:37,500 --> 00:23:42,649 Suze: yours is actually pretty simple. You have one choice and 285 00:23:42,660 --> 00:23:49,199 Suze: one choice only to take the money out of the 286 00:23:49,209 --> 00:23:53,209 Suze: inherited IRA. And that is you are subjected to the 287 00:23:53,219 --> 00:23:55,770 Suze: 10 year rule only. That's it. 288 00:23:56,359 --> 00:23:59,550 Suze: Your choice. You can let it sit there for 10 years. 289 00:23:59,560 --> 00:24:02,089 Suze: But by the 10th year after death, you have to 290 00:24:02,099 --> 00:24:05,849 Suze: wipe it clean. You can take money out every single year. 291 00:24:05,859 --> 00:24:08,099 Suze: If you want, you can do anything with it within 292 00:24:08,109 --> 00:24:12,630 Suze: those 10 years. But by the 10th year, you need 293 00:24:12,640 --> 00:24:13,938 Suze: to wipe it clean. 294 00:24:14,349 --> 00:24:17,609 Suze: Just some advice to you. I would not let it 295 00:24:17,619 --> 00:24:20,760 Suze: sit there for 10 years. Remember, these are pre taxed 296 00:24:20,770 --> 00:24:23,849 Suze: accounts I'm talking about. I would not let it just 297 00:24:23,859 --> 00:24:27,469 Suze: sit there for 10 years. And then all of a 298 00:24:27,479 --> 00:24:29,649 Suze: sudden you have to take it out in one lump 299 00:24:29,660 --> 00:24:30,239 Suze: sum 300 00:24:31,130 --> 00:24:36,139 Suze: unless it was a very small, small inherited ira that 301 00:24:36,150 --> 00:24:40,239 Suze: won't affect your tax bracket. So depending on the amount 302 00:24:40,250 --> 00:24:43,709 Suze: of money that is in the IRA, when you inherit it, 303 00:24:44,099 --> 00:24:46,109 Suze: make an intelligent decision 304 00:24:46,520 --> 00:24:48,739 Suze: that if it's a lot of money take it out 305 00:24:48,750 --> 00:24:51,949 Suze: every year. So by the 10th year it's gone, if 306 00:24:51,959 --> 00:24:54,359 Suze: it's not going to affect your tax bracket or it's 307 00:24:54,369 --> 00:24:57,300 Suze: a small amount of money, if you want to, you 308 00:24:57,310 --> 00:25:00,250 Suze: can leave it in there all 10 years to grow, 309 00:25:00,300 --> 00:25:01,780 Suze: tax deferred. 310 00:25:03,000 --> 00:25:06,819 Suze: Next. If you answered no to question one 311 00:25:07,619 --> 00:25:13,069 Suze: and if you answered no to question two as well, 312 00:25:13,959 --> 00:25:18,540 Suze: then you are a non eligible designated beneficiary where the 313 00:25:18,550 --> 00:25:23,619 Suze: decedent died on or after the required beginning date. If 314 00:25:23,630 --> 00:25:25,050 Suze: that is you, 315 00:25:25,790 --> 00:25:30,989 Suze: then you have to do two things. You first have 316 00:25:31,000 --> 00:25:36,729 Suze: to stretch the distributions over the longer of the beneficiary's 317 00:25:36,739 --> 00:25:41,439 Suze: life or the decedent's life, whichever one is longer chances are, 318 00:25:41,449 --> 00:25:46,030 Suze: that's gonna be your life plus the account has to 319 00:25:46,040 --> 00:25:52,949 Suze: be wiped clean in 10 years. You have to do both. Again, 320 00:25:52,959 --> 00:25:54,449 Suze: you can take out more 321 00:25:55,180 --> 00:25:58,060 Suze: during those years. You can do it any way you want, 322 00:25:58,170 --> 00:26:00,750 Suze: but you have to take out at least 323 00:26:01,579 --> 00:26:06,879 Suze: the amount of money according to your life expectancy over 324 00:26:06,890 --> 00:26:09,479 Suze: your life or the decedent's life. 325 00:26:10,670 --> 00:26:14,689 Suze: There is a third category as well 326 00:26:15,420 --> 00:26:21,160 Suze: and that is called a non designated beneficiary. 327 00:26:21,890 --> 00:26:29,050 Suze: Remember a designated beneficiary is when somebody actually names 328 00:26:29,900 --> 00:26:34,719 Suze: a person who's going to inherit this retirement account. 329 00:26:35,459 --> 00:26:39,300 Suze: A non designated beneficiary 330 00:26:39,979 --> 00:26:43,979 Suze: is if the owner of the retirement account named a 331 00:26:43,989 --> 00:26:51,560 Suze: charity named their estate named a non see through trust. 332 00:26:52,520 --> 00:26:58,280 Suze: So they didn't designate an individual, they designated a charity, 333 00:26:58,290 --> 00:27:01,780 Suze: their state or a non see through trust. 334 00:27:02,540 --> 00:27:09,280 Suze: So that's known as a non designated beneficiary. And recently 335 00:27:09,290 --> 00:27:11,969 Suze: a woman just wrote me and believe it or not, 336 00:27:11,979 --> 00:27:17,349 Suze: I think it was her grandfather, right, designated the, his 337 00:27:17,359 --> 00:27:21,510 Suze: estate to be the beneficiary of his retirement account. 338 00:27:22,180 --> 00:27:28,800 Suze: Because if it's a non designated beneficiary, believe it or not, 339 00:27:28,810 --> 00:27:33,069 Suze: the rules are different and you may find yourself in 340 00:27:33,079 --> 00:27:38,119 Suze: a situation where somebody didn't put down a beneficiary or 341 00:27:38,130 --> 00:27:41,800 Suze: they just said because they couldn't decide my estate. So 342 00:27:41,810 --> 00:27:45,750 Suze: here's what applies to you. If it is a non 343 00:27:46,219 --> 00:27:50,560 Suze: designated beneficiary retirement account. 344 00:27:51,569 --> 00:27:59,069 Suze: If the decedent died prior to their RBDs their required 345 00:27:59,079 --> 00:28:00,310 Suze: beginning date, 346 00:28:00,959 --> 00:28:07,489 Suze: then you have got to withdraw that money over five years. 347 00:28:07,500 --> 00:28:12,189 Suze: So a five year rule only applies to you. The 348 00:28:12,199 --> 00:28:15,540 Suze: woman who wrote in said, I'm so confused. Why would 349 00:28:15,550 --> 00:28:20,150 Suze: there be a difference when I'm the beneficiary of the estate? 350 00:28:20,520 --> 00:28:25,010 Suze: Because they didn't name you directly. So you have five 351 00:28:25,020 --> 00:28:27,380 Suze: years from the date of death 352 00:28:27,819 --> 00:28:32,250 Suze: to wipe that account clean, period. Obviously, you could do 353 00:28:32,260 --> 00:28:36,359 Suze: it before them. But by the fifth year after death, 354 00:28:36,709 --> 00:28:43,079 Suze: they die in 2024 in 2029 that account has to 355 00:28:43,089 --> 00:28:44,400 Suze: be wiped clean. 356 00:28:45,260 --> 00:28:46,239 Suze: However, 357 00:28:47,119 --> 00:28:50,140 Suze: if the decedent now listen to me closely here because 358 00:28:50,150 --> 00:28:55,219 Suze: this is actually an advantage if the decedent died on 359 00:28:55,229 --> 00:29:03,020 Suze: or after their required beginning date because again, if they had, 360 00:29:03,969 --> 00:29:06,949 Suze: then she would not have to take it out over 361 00:29:06,959 --> 00:29:10,560 Suze: the five years. She would be allowed to stretch it 362 00:29:10,569 --> 00:29:16,859 Suze: over the decedents, life expectancy. That is how she would 363 00:29:16,869 --> 00:29:19,469 Suze: have to take it out. 364 00:29:20,609 --> 00:29:26,420 Suze: All right, this is what you need to know. This 365 00:29:26,430 --> 00:29:35,900 Suze: is a master class on pre-tax inherited Ira S and 366 00:29:35,910 --> 00:29:38,859 Suze: other retirement accounts. But chances are they're going to all 367 00:29:38,869 --> 00:29:45,339 Suze: be an Ira. So now that, you know, all of this, 368 00:29:46,010 --> 00:29:49,859 Suze: I need you to write in your questions 369 00:29:50,349 --> 00:29:54,890 Suze: about any Ira that maybe you've inherited or that you 370 00:29:54,900 --> 00:29:59,569 Suze: don't understand in regards to this topic, right? In your question, 371 00:29:59,579 --> 00:30:02,390 Suze: you only have till Wednesday of this coming week to 372 00:30:02,400 --> 00:30:05,959 Suze: do so. If KT chooses it, we'll answer it on 373 00:30:05,969 --> 00:30:07,839 Suze: the air. However, 374 00:30:08,209 --> 00:30:12,349 Suze: you have got to include, are you a non eligible, 375 00:30:12,359 --> 00:30:17,739 Suze: designated beneficiary? Are you an eligible, designated beneficiary? Did the 376 00:30:17,750 --> 00:30:23,670 Suze: decedent die on or after the required beginning date? You 377 00:30:23,775 --> 00:30:27,275 Suze: have to tell me those things for me to be 378 00:30:27,285 --> 00:30:32,525 Suze: able to answer your questions directly. You just can't say 379 00:30:32,635 --> 00:30:35,905 Suze: I just inherited an IRA. I don't know what to 380 00:30:35,915 --> 00:30:40,675 Suze: do with it in today's world. Now, you have to 381 00:30:40,685 --> 00:30:45,954 Suze: know your situation and this master class today, I hope 382 00:30:45,964 --> 00:30:50,994 Suze: has defined it very clear for you. All right. 383 00:30:51,270 --> 00:30:56,040 Suze: Until Thursday, there's only one thing that I hope you 384 00:30:56,050 --> 00:30:59,630 Suze: remember when it comes to money and it is this 385 00:31:00,180 --> 00:31:06,050 Suze: people first, then money, then things and if you stay safe, 386 00:31:06,060 --> 00:31:11,209 Suze: you stay knowledgeable, you take the time to understand 387 00:31:12,130 --> 00:31:14,709 Suze: everything you need to know about your money. 388 00:31:15,790 --> 00:31:18,699 Suze: You take the time to understand everything you need to 389 00:31:18,709 --> 00:31:21,579 Suze: know about money that you are going to inherit. 390 00:31:22,750 --> 00:31:28,180 Suze: Then guess what? You will be unstoppable.