1st Look at Retirement Distribution Planning Under the SECURE Act

The Setting Every Community Up for Retirement Enhancement, or SECURE Act, was signed into law on December 20, 2019 as a last-minute addition to the recent spending bill passed by Congress and became effective January 1, 2020. The SECURE Act is the biggest legislative change to retirement plans in over a decade.

While there are many changes to retirement plan rules within the Act, the most significant change is the death of the so-called “stretch IRA” for most beneficiaries inheriting IRAs and other qualified retirement accounts after 2019. Under pre-SECURE Act rules, beneficiaries of IRAs and other qualified retirement accounts were permitted to stretch distributions over their life expectancy, requiring only small “minimum distributions” per year-effectively deferring income taxes and allowing the IRA to compound tax free for many years. Under the SECURE Act, most individuals inheriting an IRA or other retirement benefits after 2019 will now be required to completely withdraw all plan assets within 10 years of the participant’s date of death. This rule change has flipped traditional estate planning doctrine on inherited retirement account planning on its head.

Learn about the new retirement plan distribution rules for inherited accounts and their impact on existing estate plans, as well as on planning recommendations going forward when dealing with retirement benefits.