Important Update: SECURE Act 2019

Senior Law News | Dec 23, 2019 | Letha Sgritta McDowell

The SECURE Act was passed yesterday as part of the House Appropriations Bill, making sweeping changes to how qualified plans are paid out after the death of the original owner. Hook Law Center originally reported on this issue on May 28, 2019, analyzing the potential end of the stretch IRA. At that time there were differences between the House and Senate version of the bill which had to be reconciled before the bill, which would change how IRAs and other qualified plans could be paid out after the death of the original owner, became law. After several months and reconciliation, a modified version of the House bill passed.

The SECURE Act now allows continued tax deferrals for spouses, minor children, persons with disabilities, and certain trusts created for the sole benefit of persons with disabilities. Any other beneficiaries must withdraw the funds from the qualified plan within 10 years after the date of the original owner’s death.

Prior to the passing of the SECURE Act, with careful planning, tax deferred funds could be passed to subsequent beneficiaries and paid out over the lifetime of the beneficiary, thus allowing the assets to grow tax free and minimizing the amount the beneficiary was required to take annually, therefore reducing income taxes. Now, absent one of the exceptions, tax deferred funds will be subject to continued tax deferral for a maximum of 10 years, thus greatly accelerating the time frame in which taxes must be paid.

Guidance as to how some of the provisions of the new SECURE Act will need to be provided in the form of regulations and many details remain unclear. However, it is clear that many estate and financial plans involving qualified retirement funds will need to be reviewed and revised to take into account the changes in the law.

Letha Sgritta McDowell

Attorney, Shareholder, CELA
757-399-7506 | 252-722-2890
[email protected]

Letha Sgritta McDowell is a Shareholder of Hook Law practicing in the areas of estate planning, elder law, special needs planning, estate and trust administration, asset protection planning, long-term care planning, personal injury settlement consulting, guardianships & conservatorships, and tax law. Ms. McDowell’s clients range from high-net-worth individuals with over $75 million in net worth to families with limited assets.

Ms. McDowell is a past President of the National Academy of Elder Law Attorneys and was named as a Fellow of the prestigious American College of Trusts and Estates Council (“ACTEC”) in 2020. She is certified as an elder law attorney by the National Elder Law Foundation (“CELA”) and Board Certified as a specialist in Elder Law by the North Carolina State Bar Board of Legal Specialization. Furthermore, McDowell is accredited to prepare and prosecute claims with the Department of Veterans Affairs.

Ms. McDowell is currently the chair of NAELA’s strategic planning committee, a member of the Board of Directors for the North Carolina Chapter of NAELA, and a member of the Board of Directors for the Purdue Center for Cancer Research. She is the former Chair of the North Carolina State Bar’s Elder Law Specialization Committee and is the former Editor-in-Chief of “Gray Matters”, the newsletter for the Elder Law Section of the North Carolina Bar Association. She is a consultant for InterActive Legal and has worked on several law and technology initiatives including IBM’s Watson project. Along with her experience practicing as an attorney, she has dedicated much of her time writing for national publications including, but not limited to: Wolters Kluwer, Wealthmanagement.com, the NAELA Journal, Trust & Estates Magazine and many more.

Practice Areas

  • Elder Law
  • Estate & Trust Administration
  • Estate Planning
  • Asset Protection Planning
  • Long-Term Care Planning
  • Special Needs Planning

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