On May 23, 2019, the U.S. House of Representatives passed a bill that, if signed into law, would significantly change estate planning for Qualified Plans and IRAs (referred to herein, collectively, as "Retirement Benefits"). The Setting Every Community Up for Retirement Enhancement Act of 2019 (the "SECURE Act") received overwhelming support in the House, passing 417-3. The SECURE Act extensively amends the provisions of the Internal Revenue Code (the "Code") relating to Retirement Benefits, including provisions that apply during the life of the account owner or participant (referred to herein as the "participant"), as well as provisions applicable to Retirement Benefits inherited by beneficiaries at the participant's death.
In addition to other changes affecting contributions to and administration of retirement accounts, the SECURE Act would eliminate the maximum age for contributions to "traditional" IRAs (currently age 70 ½). It also would raise the age at which a participant must begin taking distributions (referred to as "Required Minimum Distributions" or "RMDs") from a Qualified Plan or traditional IRA from age 70 ½ to age 72. However, one of the more significant changes in the SECURE Act, from the perspective of estate planning professionals, is its effect on the ability to stretch distributions of inherited Retirement Benefits over the life of the beneficiary.