Legal Blog
The Weekly Scenario: Is Congress Taking Away the “Stretch IRA” ?
Question: I understand Congress is changing the rules and may take away the ability to utilize the so-called “stretch IRA”?
Answer: The House Ways and Means Committee recently passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (the SECURE Act).
This bill includes a number of provisions, but there is still a ways to go before the SECURE Act becomes law.
The SECURE Act includes some good things for people who have traditional IRAs, including the following:
- It would remove the prohibition on traditional IRA contributions for those age 70½ and over.
- The SECURE Act would increase early access to IRA funds by creating a new exception to the 10% early distribution penalty. The bill would allow penalty-free distributions for any “qualified birth or adoption distributions.”
- The current proposal would increase the age when required minimum distributions (RMDs) must begin from age 70½ to age 72.
But there are also some provisions which could be bad news for IRA account owners. In order to create a new revenue source, the SECURE Act would essentially do away with the stretch IRA. Under the proposed legislation, distributions to beneficiaries other than the surviving spouse, disabled or chronically ill people, individuals who are not more than 10 years younger than the account owner, or a child of the account owner who has not reached the age of majority would generally be required to be paid out by the end of the tenth (10th) calendar year following the year of the IRA owner’s death.
Comment: While the act has bipartisan support, the Senate also has its own version of a retirement savings act which I have not seen but understand is very different from the SECURE Act.
As always, if you have any questions or would like to learn more, please contact Steve Shane at sshane@offitkurman.com or .
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
ABOUT OFFIT KURMAN
Offit Kurman is one of the fastest-growing, full-service law firms in the mid-Atlantic region. With over 185 attorneys offering a comprehensive range of services in virtually every legal category, the firm is well positioned to meet the needs of dynamic businesses and the people who own and operate them. Our twelve offices serve individual and corporate clients along the I95 corridor in the Virginia, Washington, DC, Maryland, Delaware, Pennsylvania, New Jersey, and New York City regions. At Offit Kurman, we are our clients’ most trusted legal advisors, professionals who help maximize and protect business value and personal wealth. In every interaction, we consistently maintain our clients’ confidence by remaining focused on furthering their objectives and achieving their goals in an efficient manner. Trust, knowledge, confidence—in a partner, that’s perfect.
Find out why Offit Kurman is The Better Way to protect your business, your assets and your family by connecting via our Blog, Facebook, Twitter, Instagram, YouTube, and LinkedIn pages. You can also sign up to receive LawMatters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.
MARYLAND | PENNSYLVANIA | VIRGINIA | NEW JERSEY | NEW YORK | DELAWARE | WASHINGTON, DC
