REQUIRED DISTRIBUTIONS UNDER SECURE ACT
June 27, 2022 - Douglas Myser
Required distributions under secure act. During the Covid pandemic, thousands of individuals drew down retirement accounts, just to get by. Because of the fact that those retirees now had lower amounts for retirement, Congress enacted legislation to let them contribute more to future retirement accounts. But then they also enacted the Secure Act, and some changes to Required Minimum Distributions were made. The IRS proposed regulations, Regulation 105954-20, was issued to address the required minimum distributions from qualified plans, annuity contracts, custodial accounts and retirement income accounts. IRAs and annuities, and eligible deferred compensation plans. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 made several changes to retirement regulations and the proposed regulations are updates to reflect the amendments. Required distributions under secure act.
The SECURE Act eliminated the "stretch IRA" for most people who inherit in 2020 or later and replaced it with a 10 year payout provision for most non-spouse beneficiaries. There is no requirement that any amount be taken in any particular year, so long as all funds are withdrawn from the account by the end of the 10th year. Essentially, these are the same rules as under the 5 year distribution rules except a non-eligible designated beneficiary gets 10 years rather than 5 years to take the funds out. The SECURE Act also carves out exceptions by creating a new class of designated beneficiary now called eligible designated beneficiaries or EDBs. EDBs can be spouses, people with disabilities, chronically ill individuals, minor children up to the age of majority, but not grand children.
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