Abstract
- The Secure Act passed by Congress in December of 2019 is designed to increase retirement savings by individuals and to extend retirement plans to more people in the United States. The legislation makes it easier for companies to offer retirement plans to employees through tax incentives and reduced costs and administrative duties and also extends the age from 70.5 to 72 when required minimum distributions (RMDs) from tax-deferred accounts (IRA, 401-k, 403-b, 457-b) must begin. In 2022 new life expectancy tables will also be available which contain factors that reduce the size of RMDs that must be taken from these retirement accounts and be subject to income tax each year. The cost in lost tax revenue from all of the modifications from the Secure Act is estimated at $15.7 billion annually. To fund the changes, stretch IRAs available to non-spouse beneficiaries for inherited accounts beginning in 2020 are eliminated with some exceptions. This paper explores the Secure Act and discusses the changes made to: the age for required minimum distributions; the life expectancy tables; and the required distributions to non-spouse beneficiary upon death of the plan owner.