Author Archives: Agnes Cox

The SECURE Act and Inherited IRAs

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE) Act made major changes to IRA RMD rules, pushing the age of onset from 70½ to 72. The SECURE Act 2.0 further increased this to age 73.

The SECURE Act also significantly changed some inherited IRA rules for non-spouse beneficiaries. Starting with those inherited after Jan. 1, 2020, the SECURE Act requires the entire balance of the participant’s inherited IRA account to be distributed or withdrawn within 10 years of the original owner’s death. The 10-year Rule applies regardless of whether the participant dies before, on, or after the required beginning date (RBD), the age at which they had to begin RMDs.


In other words, you must withdraw the inherited funds within 10 years and pay income taxes on the distributed amounts. Since withdrawals are required, you won’t pay the 10% penalty if you’re under 59½. But you must pay income taxes on the distributions and eventually empty the account.

Exceptions to the 10-Year Rule

Some beneficiaries are exempted from the 10-year Rule. This exemption includes:

  • A surviving spouse
  • A disabled or chronically ill person
  • A child who hasn’t reached the age of majority
  • A person not more than 10 years younger than the IRA account owner2

These beneficiaries are not obligated to deplete the IRA within 10 years. They will likely take annual RMDs from it, where the exact amount can be calculated based on their life expectancy.

Beneficiaries have until Dec. 31, following the IRA owner’s death, to begin withdrawals. However, if the original account owner was required to take an RMD in the year they died but hadn’t yet, the beneficiary must take that RMD for them in that year, in the amount the deceased would’ve withdrawn.

Additionally, a surviving spouse beneficiary may delay the commencement of distributions until the end of the year when the original IRA owner would have begun taking RMDs or until the surviving spouse’s required beginning date.

Inherited IRA Rules: Non-Spouse and Spouse Beneficiaries

Whether a spouse or non-spouse is named the beneficiary of an individual retirement account (IRA) when the IRA owner dies, the current tax law allows the inheritance, or the total sum in the account, to be accepted tax-free. Beneficiaries of the IRA can also withdraw from the account without penalty.

However, distributions from an inherited IRA are required. Remember that any voluntary or required minimum distribution (RMD) from the account is taxable. Taxation depends on the type of IRA involved and the beneficiary’s relationship to the deceased.

Spouses who inherit an IRA have more flexibility than non-spouse beneficiaries regarding when they must begin taking withdrawals and deplete the account. One of the important for non-spouse beneficiaries is that all money from the account must be withdrawn by Dec. 31, the 10th year after the original owner’s death.

Types of IRAs

A traditional IRA offers a tax deduction during the years contributions are made to the account. The contribution amount is used to reduce the person’s taxable income in the tax year for which the contribution was made. You can also make contributions that are not tax-deductible.

IRAs grow on a tax-deferred basis. This means any accumulated earnings and interest are not taxed. However, when the money is withdrawn as a distribution, the amounts are taxed at the individual’s income tax rate in the year of the withdrawal.

If the money is withdrawn before the age of 59½, there’s a 10% tax penalty imposed by the IRS and the distribution would be taxed at the owner’s income tax rate. If you inherit a traditional IRA to which both deductible and nondeductible contributions were made, part of each distribution is taxable.

A Roth IRA doesn’t offer an upfront tax deduction like traditional IRAs, but withdrawals from a Roth are tax-free in retirement. If you inherit a Roth IRA, it is completely tax-free if the Roth IRA was held for at least five years, starting Jan. 1 of the tax year for which the first Roth IRA contribution was made.

If you receive distributions from the Roth IRA before the end of the five-year holding period, they are tax-free to the extent that they represent a recovery of the owner’s contributions. However, any earnings or interest on the contribution amounts is taxable.

Required Minimum Distributions (RMDs)

The IRS has a minimum amount that accountholders must withdraw from an IRA and defined-contribution plans, such as 401(k) plans) each year. These mandatory withdrawals are called required minimum distributions. RMDs are designed to exhaust the funds in the account eventually. RMDs apply to traditional IRAs. Roth IRAs don’t require RMDs.

If you own a traditional IRA, you must begin your distributions when you reach age 73, a new age limit established by the SECURE Act 2,0, which is part of the Consolidated Appropriations Act of 2023. However, if you turned 72 before Jan. 1, 2023, you would have needed to begin taking RMDs at age 72, or 70½ if you hit that milestone before Jan. 1, 2020.

All RMD withdrawals are included in your taxable income except for any portion taxed earlier—say, if you contributed to the account with after-tax dollars.

If you fail to take your RMD, you can be subject to a 25% penalty on the amount you should have—but didn’t—withdraw. However, this penalty can be reduced to 10% if you take the missed distribution within the correction window. According to the Act, this window begins when the penalty is imposed. Usually, on Jan. 1 after the year, you failed to take a distribution. The window ends on the earliest of:

  • The date the IRS mails you a notice of deficiency
  • The date the IRS assesses the penalty
  • The last day of the second taxable year after the penalty is imposed

If you take your RMD before the end of the correction window, your penalty will be reduced to 10%

How Does A Gold-Backed IRA Work?

A gold IRA or precious metals IRA is an individual retirement account in which physical gold or other approved precious metals are held in escrow for the benefit of the IRA owner. It works just like a regular IRA, only instead of holding paper assets, it contains physical coins or bars. A gold IRA is a self-directed individual retirement account (IRA) that allows you to own gold bullion. You can’t own physical gold in a regular IRA, although you can invest in various assets with exposure to gold, such as stocks of gold mining companies or gold exchange-traded funds (ETFs).

A gold IRA is a retirement account that allows people to invest in physical gold. They are often used to diversify savings and create a hedge against inflation. Like other IRAs, these accounts also offer valuable tax benefits. In retirement, you need an investment that generates current income or is expected to reasonably appreciate so you can sell it and use it for consumption.

You’re wasting tax-deferred space for something that doesn’t generate income; therefore, they are not avoiding taxes. Like any other traditional IRA, the account’s value will be subject to taxes upon withdrawal, unlike owning stocks, mutual funds, ETFs, etc. Due to Noble Gold’s extensive network of partners and suppliers, customers have competitive prices on gold purchases.

These investments are available in a regular brokerage IRA, meaning you wouldn’t have to go through the additional work and costs of setting up a self-directed gold IRA. If you’re a younger investor or still want to grow your retirement savings, you don’t have to give up on the potential of a gold IRA. Still, a gold IRA can be a good option for investors who want to diversify their retirement accounts and also take advantage of the hedging benefits that the yellow metal offers against other financial assets, such as paper currency and stocks. When you use a direct rollover, the existing custodian will send a check to your gold IRA company so the firm can assist you in your precious metals purchase.

While fewer companies offer gold IRAs than other types of IRAs, you still have several options. Physical gold is considered an alternative investment, which is not allowed in a regular IRA. According to Edmund C, the ability to use gold and other materials as securities in an IRA was created by Congress in 1997. However, one of the trusted and highly regarded gold IRA companies on our list can help you resolve any confusion.

Before opening a gold IRA, remember that it is not the only way to invest in gold with your retirement funds. The companies present a simple three-step process to protect your retirement finances with a gold IRA. The best way to take advantage of a gold IRA is to use it as an accumulation vehicle for a broader, diversified investment strategy. As with any retirement account, with your gold IRA or custom precious metals IRA, you will invest your retirement funds based on a specific tax treatment (pre-tax or after-tax) and then make distributions in the future.