Understanding The SECURE Act, Part 3

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We’re back to breaking down the SECURE Act once again on the podcast. Back in July, we covered a couple of the provisions under the proposed act like penalty-free distributions for the birth or adoption of a child, tax credits, and the lifetime income disclosure for defined contribution plans. But we only briefly touched on the removal of provisions for the Stretch IRA. On this episode, we’ll spend some more time on the Stretch IRA and how the SECURE Act could reshape it if it passes into law.

Confidence Corner

We’ve covered from a broad view many of the proposed changes under the proposed SECURE Act. It still needs to pass the Senate in order to take another step toward becoming law, but prognosticators still predict it will pass soon. It might go through a few more tweaks and changes, but the prevailing winds show that it would behoove us to get ready for the changes sooner rather than later.

If you need a primer on the SECURE Act, check out part 1 and part 2 of this series.

In part 3 of the series, Nathan O’ Bryant and co-host Marc Killian explore how the SECURE Act might specifically change a well-liked (among many financial professionals) strategy called the Stretch IRA. It has traditionally been a great way for savers to minimize tax implications and efficiently pass wealth on to the next generation. For those who don’t want Uncle Sam to take a huge chunk out of their portfolio, it’s been a useful tool. But in some ways, the SECURE Act would threaten the execution of Stretch IRAs as we know it.

Check out this episode for more information about the SECURE Act, Stretch IRAs, and how to best understand the implications of both going forward.

[1:32] – A refresher of what the SECURE Act is.

[2:10] – Myth: The Stretch IRA isn’t being fully “shut down”. It’s being changed, but not necessarily eliminated.

[3:23] – It really impacts high earners because of how quickly you’ll have to withdraw large sums.

[5:10] – Does this also impact inherited IRAs?

[5:56] – The rule could go in place by end of the year.

[6:38] – Could people still do a spousal rollover?

[7:18] – Nathan & Marc play out a hypothetical situation of what someone will need to do once the law passes.

 

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Related Content:

CNBC: Congress considering changes to retirement.

 

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