SECURE Act Collateral Damage

On December 20, 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law, which had wide-ranging implications to both RMD start dates and the rate at which non-spousal beneficiaries had to take RMDs. As is often the case with statutory language, the SECURE Act included several provisions that were ill-defined and left open to substantial interpretation. Thus, for more than two years, everyone with an IRA has been anxiously awaiting the issuance of regulations to fill in the gap and answer open questions. This has allowed for a multitude of opinions and views of the implications of the law. But worry not, the IRS is here to help!

  • In early 2021, the IRS issued its annual update to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), which included an example that seemed to indicate that Non-Eligible Designated Beneficiaries would be required to abide by ‘regular’ ‘stretch’ RMDs in addition to the 10-Year Rule. Concerned parties immediately raised questions about the Publication, and within weeks, an IRS spokesperson indicated that the initial version contained a mistake and that a corrected version of the Publication would soon be made available.

  • Then, on May 25, 2021, the IRS posted a revised version of Publication 590-B, in which it seemed to confirm that the original interpretation of the 10-Year Rule was correct and that Non-Eligible Designated Beneficiaries would not be required to take any distributions until the 10th year after the retirement account owner’s death.

  • Then, on February 23, 2022, the IRS issued Proposed Regulations to reflect the changes to the Internal Revenue Code made by the SECURE Act. Although the Regulations cannot yet be relied upon, are not yet finalized, and are likely to be amended at least somewhat before that happens, they provide the best window into the IRS’ current thinking on a variety of issues to date.

  • The House voted 414-5 on March 29 to pass the Securing a Strong Retirement Act, or “SECURE Act 2.0.” This legislation (if it passes the Senate in its current form) aims to make even more changes to RMD start dates.

Confused yet?

Join us on Thursday, April 14th for our webinar, where we will dissect these rules and share actionable ideas surrounding these proposed regulations to the SECURE Act and the newly-passed legislation coming out of the House.

Citation: Levine, J. (March 2, 2022). The Impact Of New IRS Proposed Regulations On The SECURE Act: RMDs, Eligible Designated Beneficiaries, Trusts, And More!. Kitces.com. Retrieved April 8, 2022, from https://www.kitces.com/blog/irs-proposed-regulations-secure-act-rmds-eligible-designated-beneficiaries-see-through-trusts/?action-log=true

Rebecca McClure