It looks like SECURE is in the spending bill.
On December 12, 2019, senior lawmakers announced they had reached a tentative agreement on the $1.4 trillion government spending bill. In a handshake deal, Rep Nita Lowry of New York announced that they had a “meeting of the minds.” $1.4 trillion is a pretty big handshake, and there was no formal bill. The question is, what’s in there?
From the standpoint of an ordinary mortal with qualified plans or IRAs and beneficiaries they like, the answer is, almost certainly, SECURE. The Setting Every Community Up for Retirement Act passed the House by an overwhelming majority and was mired in the Senate with three detractors. SECURE will do a lot of good things for savers, like allow more people to participate in 401(k) plans. It increases the Required Minimum Distribution (RMD) age to age 72, which will allow acclamation-oriented IRA owners to delay taking withdrawals and build a bigger balance.
SECURE contains one unwelcome change for IRA owners: it mandates that many beneficiaries, notably beneficiaries that are over the age of majority and not disabled nor married to the IRA owner, will now have to withdraw the entirety of the funds from their inherited IRA within ten years of the death of the IRA owner. This is a massive change, as I’ve written before. SECURE will radically change IRA owner’s estate and financial planning. It will change the way we use trusts; and greatly alter the strategies with Roth IRAs and other Roth opportunities like back-door, Mega-Roth and Roth 401(k).
The SECURE Act is in the spending bill, which means it will now become law, if passed by the Senate and signed by the President. That means if you have, or will have, a significant IRA, you’ve got a whole new resolution for 2020: to get your IRA planning fixed. Stay tuned.