New Retirement Account Rules for the New Year

Happy 2020!  Major changes to the federal retirement account rules were signed into law December 20, 2019, under the SECURE Act (Setting Every Community Up for Retirement Enhancement Act).  Under the new rules, a retirement account can no longer be “stretched” and must be distributed within 10 years to non-spouse beneficiaries.  This will increase the taxes that non-spouse beneficiaries pay on the funds.  An exception was provided for disabled beneficiaries, thanks to the advocacy work of the National Academy of Elder Law Attorneys (NAELA). 

Fortunately, most retirement accounts continue to be excluded as a resource in long-term care Medicaid.  If the account owner has not yet reached the age when required minimum distributions begin, the account must be annuitized to be excluded.

The new law also pushes back the age at which minimum distributions must be withdrawn to age 72, and removes the cap for making contributions to a traditional IRA.  Read more about the new rules here.