The SECURE Act (“Setting Every Community Up for Retirement Enhancement” Act), which was enacted in December 2019, eliminated the “stretch IRA” – a feature of an inherited IRA account[1] that allowed the beneficiary to stretch out required minimum distributions (RMDs) over his or her lifetime, thereby deferring a significant amount of income taxes on the RMDs. Now, beneficiaries must withdraw the entire account over the 10-year period following the owner’s death. Doing so will significantly accelerate the income tax due with respect to the account.
Perhaps you are thinking: this is a piece of legislation coming from Washington – there’s got to be a loophole, right? The answer is: maybe. Here are a few planning ideas to consider in light of the SECURE Act:
- Increase the number of designated beneficiaries.