At this point, you’ve probably heard about the SECURE Act, which took effect on January 1, 2020. It makes several changes to retirement savings law. Here are the six key changes you need to know about:
In my opinion, the most important change is the elimination of the “Stretch IRA” for most non-spouse beneficiaries. Up to this point, such beneficiaries were allowed to withdraw an annual required minimum distribution (RMD) based on the beneficiary’s life expectancy, which meant the majority of the Inherited IRA could continue to grow tax-deferred for many years, maybe even decades for young beneficiaries. The SECURE Act now requires the entire Inherited IRA to be distributed within 10 years. This change could have significant estate planning implications, especifically for those naming a trust as beneficiary of a retirement account.