Individual Retirement Accounts (IRAs)

The Setting Every Community Up for Retirement Enhancement (SECURE) Act is a bipartisan retirement bill that was included in a larger legislative package passed by the House of Representatives on December 17, 2019, and by the Senate on December 19, 2019. The bill was initially introduced in the House of Representatives and championed by Ways & Means Chairman Richard Neal and ranking member Kevin Brady. The bill includes reforms to DC Plans, DB plans, IRAs, and 529 plans.

Most provisions in the law became effective January 1, 2020.

For anyone who inherited an IRA from an original IRA owner who passed away prior to January 1, 2020, no changes to the current distribution schedule are required. However, for situations where the original IRA account owner passes away after December 31, 2019, fewer beneficiaries will be able to extend distributions from the inherited IRA over their lifetime. Many will instead need to withdraw all assets from the inherited IRA within 10 years following the death of the original account holder. Exceptions to the 10-year distribution requirement include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent.

The law increases the age at which an individual must begin taking required minimum distributions (RMDs) from 70½ to 72. The act states that this change applies beginning with IRA account owners who will attain 70½ on or after January 1, 2020. Congress recognizes Americans are increasingly working and living longer and updating RMD rules to reflect changes in life expectancy will allow Americans to continue their retirement savings for an extended period of time.