While offering certain incentives to enhance retirement savings, proposed legislation known as the SECURE Act (the “Act”) would severely limit the use of stretch IRAs and cause many individuals to amend their estate planning documents and retirement planning generally.
On the upside, the Act permits individuals to defer required minimum distributions and make tax deductible contributions until age 72. Among other provisions, the Act permits individuals with 529 plans to withdraw up to $10,000 to pay down student loans, which will help reduce the nationwide student loan epidemic.
The biggest negative of the Act is that it limits the ability of non-spouse beneficiaries to stretch IRA payments to no more than 10 years.
Please refer to our SPECIAL REPORT-SECURE Act Limits Stretch IRAs 7.2019 for details on the proposed Act, how the Senate would alter the provisions, and planning suggestions to think about in light of the possible enactment of the SECURE Act this year.