Retirement Accounts and Conduit Trusts and SECURE Act. What Do I Need to Do???
The recent passage of the “ Setting Every Community Up for Retirement Enhancement” Act (SECURE Act) in December 2019 created some significant changes to retirement accounts. One big change of SECURE resulted in changes to allowing what is commonly referred to as “stretch” IRA’s. Previously, beneficiaries such as children and grandchildren, were able to have funds withdrawn from an inherited retirement account over the rest of their expected life. That allowed younger beneficiaries to extend (or stretch) the IRA distributions over several years, or potentially decades for very young beneficiaries. The result was that the taxable income was spread over a long period of time that allowed the account to continue to grow (hopefully). With a few exceptions, the stretch IRA is no longer an option and funds from a traditional IRA/401k must be withdrawn within ten (10) years of your passing. Many clients incorporated provisions in your estate plan that used the “conduit” trust as a ...