Jeff Stimpson for Financial Advisor
Congress recently passed legislation that might affect high-net-worth clients’ tax situations.
The Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act), which passed in December, encompassed nearly 30 provisions intended to encourage adoption of employer-sponsored plans and promote lifetime income options. But the act also altered the rules for inheriting IRAs and other tools for high-net-worth estate planning.
“Probably the most remarkable change resulting from the SECURE Act is the elimination of the ‘stretch’ provision for most (but not all) non-spouse beneficiaries of inherited IRAs and other retirement accounts,” said Dean Mioli, a CPA, CFP and director of investment planning at Independent Advisor Solutions by SEI in Oaks, Pa.
Under previously issued regulations, non-spouse designated beneficiaries could take distributions over their life expectancy, but for many retirement account owners who die in 2020 and beyond, beneficiaries will have only 10 years to empty the account. Within this period, there are no distribution requirements.