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How the Latest IRS Regulations Impact Inherited Retirement Accounts for ScanSource Employees

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Healthcare Provider Update: ScanSource offers medical, dental, and vision insurance to its employees, along with access to Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), and Mental Health Benefits. Additional perks include paid time off, tuition assistance, and flexible work arrangements 1. As ACA premiums are projected to rise by 1518% in 2026, ScanSources employer-sponsored coverage may offer more financial stability compared to marketplace plans. With enhanced subsidies set to expire, employees relying on ACA alternatives could face out-of-pocket increases exceeding 75%. Click here to learn more

The  Internal Revenue Service (IRS)  has finalized rules that significantly impact ScanSource employees who are heirs of retirement accounts, mandating minimum annual withdrawals from inherited IRAs and 401(k)s. This development represents a considerable shift from previous guidelines which permitted many non-spousal beneficiaries to spread out the distribution of inherited retirement funds throughout their lifetimes, optimizing growth through extended investment periods. These new rules, introduced under the 2019 Secure Act, now require many heirs to deplete these accounts within a ten-year timeframe.

Before this rule change, beneficiaries enjoyed the flexibility to plan withdrawals to their financial benefit, potentially postponing distributions to the last year of the allowed period. However, under the new IRS guidelines, interpreting Congressional intent aims to prevent the wealthy from indefinitely deferring taxes on inherited retirement wealth. This requirement now applies to all future inheritances and those received since 2020, impacting many within ScanSource.

The revised IRS stance excludes spouses, who are subject to a different set of rules. 

The legislative shift reflects broader trends where Congress seeks to increase revenue through stricter management of retirement funds. These changes underscore the importance for ScanSource's workforce to continually adapt to new financial landscapes.

One area of confusion has been the timing and amounts of mandatory withdrawals, leading to widespread noncompliance. Recognizing this, the IRS has shown leniency, waiving penalties for missed distributions until 2024. From 2025, annual withdrawals must conform to life expectancy calculations, significantly impacting tax liabilities for heirs.

Tax professionals recommend that ScanSource employees inheriting retirement funds consider their future income prospects when planning withdrawals. Deferring larger distributions until later in the ten-year window could be advantageous, minimizing tax burdens if a reduction in income is anticipated.

The changes also affect heirs of multiple IRAs, each subject to varying rules based on the account type and the date of the original holder's death. Notably, Roth IRAs offer strategic benefits as distributions are not required until the final year and are tax-free upon withdrawal.

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Moreover, certain beneficiaries, including chronically ill individuals, must take annual distributions based on their life expectancies, irrespective of the 2019 changes. Those inheriting IRAs before these updates must adhere to older guidelines, planning withdrawals over their expected lifetimes.

For ScanSource employees navigating these complex regulations, engaging with tax professionals for strategic financial planning is crucial. Understanding and managing the layered regulations of both old and new IRA rules is essential to maximizing the financial outcomes of inherited retirement accounts while ensuring compliance with the legal requirements.

In conclusion, the recent IRS regulations emphasize a move towards stricter oversight of inherited retirement account distributions. Beneficiaries, including those from ScanSource, must navigate a stricter framework that demands vigilance and strategic financial planning to optimize their outcomes. Staying informed and consulting with financial experts is vital for managing inherited retirement wealth effectively.

What is the 401(k) plan offered by ScanSource?

The 401(k) plan offered by ScanSource is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

How does ScanSource match employee contributions to the 401(k) plan?

ScanSource provides a matching contribution to the 401(k) plan, typically matching a percentage of the employee's contributions, up to a certain limit.

When can employees at ScanSource start contributing to the 401(k) plan?

Employees at ScanSource can start contributing to the 401(k) plan after completing their initial eligibility period, which is usually outlined in the employee handbook.

Does ScanSource offer a Roth 401(k) option?

Yes, ScanSource offers a Roth 401(k) option, allowing employees to make after-tax contributions to their retirement savings.

What investment options are available in ScanSource's 401(k) plan?

ScanSource's 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and other investment vehicles.

How can employees at ScanSource access their 401(k) account information?

Employees at ScanSource can access their 401(k) account information through the plan's online portal or by contacting the plan administrator.

What is the vesting schedule for ScanSource's 401(k) matching contributions?

The vesting schedule for ScanSource's 401(k) matching contributions typically follows a graded schedule, meaning employees earn ownership of the match over time.

Can employees at ScanSource take loans against their 401(k) savings?

Yes, ScanSource allows employees to take loans against their 401(k) savings, subject to certain terms and conditions outlined in the plan.

What are the withdrawal options available in ScanSource's 401(k) plan?

ScanSource's 401(k) plan may allow for various withdrawal options, including hardship withdrawals, loans, and distributions upon retirement or termination of employment.

Is there an annual limit on contributions to ScanSource's 401(k) plan?

Yes, there is an annual limit on contributions to ScanSource's 401(k) plan, which is set by the IRS and may change annually.

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For more information you can reach the plan administrator for ScanSource at , ; or by calling them at .

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