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could result in lost income tax planning opportuni- The SECURE Act
by the beneficiary to understand the requirements

ties at best and excise tax penalties at worst.
The passage of the SECURE Act means that hastened distribution
most nonspouse beneficiaries who inherit IRA
assets on or after Jan. 1, 2020, are required to with-
This includes adult children and grandchildren and requirements
draw the full balance of the account within 10 years.
most other designated beneficiaries. This change
limits the popular “stretch” IRA tax planning tool, in many cases.
which allowed many inherited IRAs to be distrib-
uted over the beneficiary’s lifetime. Only select
groups, including spousal beneficiaries, and those in
special categories created by the SECURE Act are Sec. 401(a)(9)(B)(i) defines rules for distributions if
eligible for more extended deferral periods. the IRA owner dies after RMDs have begun. If the
The original rules under the law prior to the IRA owner has already begun taking RMDs, the
SECURE Act still drive many of the requirements decedent’s remaining interest must be distributed at
for distributions, so they are worth briefly reviewing. least as rapidly as when the owner was alive.
The RMD rules for defined contribution plans Sec. 401(a)(9)(B)(ii) requires that if the IRA
are set out in Sec. 401(a)(9). These basic rules owner dies before RMDs have begun, the account
apply to all defined contribution plans, including must be distributed within five years after the
regular and Roth IRA accounts; annuity contracts; owner’s death. This requirement was significantly
custodial accounts; profit-sharing, Sec. 401(k), and modified by the SECURE Act, as described below.
Sec. 403(b) accounts; and Sec. 457(d) deferred Under the original law, the account could be dis-
compensation accounts. tributed at any time within five years. A beneficiary
Sec. 401(a)(9)(A) provides rules for RMDs could wait until the last month of the fifth year to
during the life of an IRA owner, and Sec. 401(a)(9) take a distribution. This is not the case under the
(B) addresses RMDs after the IRA owner’s death. SECURE Act.

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