The new legislation eliminated the ‘stretch IRA’ provision, but not everyone is impacted

By Alessandra Malito @ Marketwatch.com, Dec. 28

The Secure Act, which was signed earlier this month, changes the way beneficiaries will receive money from inherited retirement accounts, but not everyone is in danger of a big tax hit.

The new rules say beneficiaries of qualified retirement accounts, such as individual retirement accounts and 401(k) plans, need to withdraw all of the money out of those accounts within 10 years, instead of over their life expectancy as was previously allowed. There are no required minimum distributions within that time frame, but the account balance must be zero after the 10th year [....]

Stretching the withdrawals over the beneficiary’s life expectancy — the so-called stretch IRA provision — meant paying less in taxes, whereas the new rule threatens to result in higher tax bills,

For many, the new 10-year rule drastically diminishes the chances of withdrawing assets in a tax-friendly manner (this provision alone is expected to generate about $15.7 billion in tax revenue over the next decade). But there are alternatives, said Steve Parrish, co-director of the Retirement Income Center at the American College of Financial Services [....] One option is a benefactor buying life insurance.

Take for example a grandmother [....]