
Home » Insights » Estate Planning » Breaking News: Congress Overhauls Retirement System and Eliminates Stretch for Inherited IRAs
Jeremiah H. Barlow
JD, Head of Family Wealth Services
Our retirement system has been overhauled with the passing of the Setting Every Community Up for Retirement Act (“SECURE Act”) . It was tacked onto the “must-pass” 2020 spending bill that was signed by the President on Friday. The SECURE Act overhauls our retirement system. With the exception of eliminating the stretch IRA, the act is overall a positive (click here for a full summary).
A key change in the SECURE Act, and viewed by many as negative, is the elimination of “stretch” IRA from inherited retirement accounts. The result is that a beneficiary can no longer stretch the distributions over his or her lifetime. Instead, a 10-year distribution rule will require all retirement assets be distributed out of the account within 10 years of the plan owner’s death. There are some exceptions for a surviving spouse and minor beneficiaries (and some other eligible beneficiaries). This new rule applies to all retirement accounts inherited on or after January 1, 2020.
From an estate planning perspective, the elimination of the stretch presents significant changes. Here are some important considerations:
The good news is that the stretch still applies to inherited IRAs that were effective in 2019 or before.
Please reach out to your advisor about potential changes that may be needed to your estate plan following the implementation of the SECURE Act.
with one of our talented wealth advisors who will help you connect all your financial dots
All investing involves risk, including the possible loss of principal. Portfolio management strategies such as diversification, asset allocation, and rebalancing do not ensure a profit or guarantee against loss. There is no guarantee that any investment strategy will achieve its objectives. Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning document preparation and other legal advice are provided through Advanced Services Law Group, Inc. Mercer Advisors Inc. is a Delaware corporation and is in no way affiliated with Mercer LLC, Mercer Investments, or the Marsh & McLennan Companies. Mercer Global Advisors Inc. is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Terms & Conditions | Privacy and Security Center | Firm Brochure Adv Part 2A | Form CRS.
©2023 Mercer Global Advisors Inc. All rights reserved.
If you have questions related to our terms and conditions please email [privacy (at) merceradvisors (dot) com]. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.