The SECURE Act’s Hidden HeadlineThe SECURE Act’s Hidden Headline
The newly created non-required distribution period may negatively impact a trust’s current income beneficiary’s entitlement to all the trust’s net income.
Passage of the Setting Every Community Up for Retirement Enhancement (SECURE) Act,1 effective Jan. 1, 2020, launched many headlines to the tune of “The Stretch is Dead.” This catchphrase tacitly refers to Internal Revenue Code Section 401(a)(9) and its accompanying regulations extending substantial income tax deferral of an individual retirement account over a beneficiary’s life expectancy. With some exceptions, the SECURE Act amended IRC Section 401(a)(9) to eliminate the life expectancy method for paying out annual required minimum distributions (RMDs) and substituted a 10-year period following the owner’s death over which to withdraw the entire IRA balance.2
Elimination of annual RMDs for targeted beneficiaries applies to defined con...
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