On December 17, 2019, the US House of Representatives approved an appropriations bill, which includes the SECURE Act previously passed in the House.  President Trump is expected to sign it once it reaches his desk.  The effective date will be January 1, 2020, and it will apply with respect to participants/owners who die after December 31, 2019.

The SECURE Act will have wide-ranging implications for retirement plans.  Among other things, the SECURE Act – which stands for “Setting Every Community Up for Retirement Enhancement” Act – eliminates the general rule that allows a designated beneficiary of a retirement account to withdraw the balance over his or her life expectancy after the death of the participant/owner, instead requiring that the entire balance be paid out – and typically subject to income tax – within ten years.  There are some exceptions when the beneficiary is the surviving spouse, a disabled individual, an individual with a chronic illness (as defined by statute), and individuals who are no more than ten years younger than the participant/owner.  There is also a deferral provision for a minor child of the participant/owner, under which the ten-year period begins on the date when the child reaches the age of majority.  The Act also increases the age when required minimum distributions must be started by the participant/owner (from 70 ½ to 72) and eliminates the age limit for contributions to individual retirement accounts.