• extend the current required minimum distribution requirements to age 72;
• require lifetime income disclosures; and
• modify the nondiscrimination rules to protect longer-service participants.
“The SECURE Act makes important changes that will go a long way toward addressing the nation’s looming retirement crisis,” Neely said.
Earlier this year, it appeared the SECURE Act was primed for immediate passage after flying through the House with a 417-3 vote.
But progress slowed when the measure reached the Senate. Reportedly, only a few senators opposed the bill, and the original goal was to streamline passage with 100 votes to avoid wasting debate time on what was initially thought to be a noncontroversial bill.
But soon after, news outlets including the Wall Street Journal attacked the SECURE Act, focusing on two controversial provisions: the elimination of the stretch IRA and the favorable treatment given to annuities inside of retirement accounts.
Why is the provision doing away with stretch IRAs so important? It’s the big revenue generator of the bill. It would eliminate most beneficiaries' ability to stretch distributions from IRAs and defined-contribution plans over their life expectancy — excluding spouses who can still take advantage of stretch strategies.
Instead of having nearly 30 years to take distributions, the SECURE Act would require all distributions to be taken by the end of the 10th year following the account owner's death.
That not only shortens the time period tax-advantaged accounts can grow, but money in Roth accounts and traditional IRAs or 401(k)s will have to be distributed faster to heirs and beneficiaries, reducing the tax-deferred growth benefits of inheriting an account.