Q: Is the SECURE Act going to make my estate planning more difficult?
A: The short answer is "yes" because it can accelerate the time within which certain of your IRA heirs and/or beneficiaries have to pay taxes to Uncle Sam.
The Setting Every Community Up for Retirement Enhancement, or SECURE Act, is a bipartisan retirement bill that was passed by Congress in December 2019 and goes into effect in 2020.
Under prior law, a beneficiary of an inherited IRA (called stretch IRAs) could take those assets over his/her lifetime so that over time large distributions do not move you up a tax bracket or two. Under SECURE, those assets must be distributed within 10 years, except for spouses, minor children, disabled persons and those persons less than 10 years younger than the IRA owner/decedent.
This eliminates the recipient of your IRA from being able to "stretch" the distributions over a longer period of time.
However, SECURE does give the taxpayer some new benefits. As long as you have earned income, you may continue to make IRA contributions (past 70 1/2 - the age at which you could no longer make IRA contribution in the past).
So, the bottom line for many IRA recipients is that they will no longer be able to take payments over their lifetimes, but they must take them within 10 years, and, of course, pay income taxes thereon.
Grayson P. Van Horn is an attorney at law serving Oklahoma residents and property owners.
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