A.K. Moody published "Are Your Retirement Beneficiary Designations SECURE?" in the Winter 2019 edition of MSBA Estates and Trusts Newsletter. The following is an excerpt:
On May 23, 2019, the U.S. House of Representatives passed the Setting Every Community Up for Retirement Enhancement Act (the "SECURE Act"), which makes broad changes to the rules for estate planning with retirement accounts. Many of the SECURE Act changes will affect the original plan owner, but there is one sweeping change to the way retirement accounts can be left to individuals and trusts upon the account owner’s death: with certain exceptions, the entire account must be withdrawn within 10 years of the owner's death. This looming change has been dubbed "The death of the Stretch IRA." The SECURE Act does except certain beneficiaries from the 10-year mandatory withdrawal. These beneficiaries are limited to spouses, disabled individuals, minors (until they reach the age of majority), and beneficiaries who are less than 10 years younger than the account holder. This article will review the current rules for inherited retirement accounts, and will also comment on beneficiary designation concerns that are applicable now and after the SECURE Act rules take effect, if ever.