In late December 2019, Congress passed and the President signed into law the SECURE Act: S
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The law took effect on January 1, 2020 and made many significant changes to retirement benefits, including eliminating the “stretch” feature for most beneficiaries. Except for a few types of beneficiaries, including your spouse, the law eliminates the long-term stretch-out payment option. The long-term stretch-out payment option previously allowed a beneficiary at your death to stretch out payments from your retirement benefits over the beneficiary’s life expectancy.
However, the SECURE Act now requires that retirement benefits must be paid out in full to most non-spouse beneficiaries within 10 years of the retirement account owner’s death. As a result, some of the estate planning techniques that had been best practices under the prior law may no longer work as intended, particularly if you have named a trust, including a trust under will, as primary or contingent beneficiary of your retirement benefits.
If you have any questions about how the SECURE Act affects your particular estate plan, or if you would like to discuss estate planning options for retirement benefits, feel free to contact one of the attorneys in our Estate Planning & Administration Group