The Setting Every Community Up for Retirement Enhancement (SECURE) Act was enacted over a year ago. At that time, we ran a special section that included a series of articles explaining the various changes the SECURE Act made to the rules concerning retirement benefits, most notably, the elimination of the ability to “stretch” the required minimum distributions (RMDs) from an individual retirement account by requiring benefits to be distributed within 10 years of the IRA owner’s death. This change prompted many practitioners to find alternatives to the stretch, for example, by using charitable remainder trusts. Practitioners continue to discover new strategies to help clients get the most out of their retirement accounts under the confines of this law. To add to the complexity in retirement planning, there’s a follow-up law in the works, the Securing a Strong Retirement Act (popularly dubbed “SECURE 2.0”).
This month’s Retirement Benefits Committee Report attempts to re-examine and make sense of the changes brought about by the SECURE Act. In their article, “The SECURE Act—One Year Later,” p. 34, Denise Appleby and Bruce D. Steiner identify clients who are affected by these changes and determine how best to implement effective planning strategies. They also highlight some of the exemptions of the law that clients may be able to take advantage of.
Not all changes made by the SECURE Act got as much publicity as the 10-year limit on RMDs. In “The SECURE Act’s Hidden Headline,” p. 56, David S. Sennett discusses how, for a trust named as beneficiary, the newly created non-required distribution period (that is, the first nine years during which a beneficiary may refrain from taking any withdrawals) may negatively impact a trust’s current income beneficiary’s entitlement to all the trust’s net income.
Additionally, in “Reduced RMDs From Retirement Accounts,” p. 46, Christopher R. Hoyt explains the new life expectancy rules that are used to calculate RMDs, resulting in longer payouts for certain beneficiaries who are still allowed to use the pre-SECURE Act life expectancy method for calculating RMDs.
Rounding out the Committee Report are articles on IRAs left to trusts with a charitable beneficiary and transforming a trust into a see-through trust.