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62 B.C. L. Rev. 357 (2021)
Kissing the Security Blanket Goodbye: How the Secure Act Will Affect IRA Beneficiaries' Long-Term Financial Security

handle is hein.journals/bclr62 and id is 363 raw text is: KISSING THE SECURITY BLANKET GOODBYE: HOW THE SECURE ACT WILL AFFECT IRA BENEFICIARIES' LONG-TERM FINANCIAL SECURITY Abstract: The Setting Every Community Up for Retirement Enhancement Act (the SECURE Act) offers many forms of new support for retirement savings to help more Americans better prepare for their retirement. It also includes a provi- sion that eliminates the stretch payout option for the beneficiaries of inherited in- dividual retirement arrangements (IRAs). Prior to the SECURE Act, beneficiaries of inherited IRAs were able to capitalize on the tax-deferred savings vehicles for the remainder of their lifetimes. After the SECURE Act, the period of tax- deferred investment for beneficiaries was limited to ten years. In eliminating the stretch payout option, Congress opted for a relatively small amount of short-term revenue rather than the long-term financial security of both the IRA owner and the beneficiaries of the IRA based upon closing a perceived loophole. This deci- sion ultimately will generate a small amount of revenue, while simultaneously having a largely detrimental impact on the beneficiaries of inherited IRAs. This Note argues that Congress should reinstate the stretch payout option for the bene- ficiaries of inherited IRAs to encourage saving and, in turn, protect retirees and their beneficiaries. INTRODUCTION On December 20, 2019, President Donald J. Trump signed into law the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act).1 Congress intended the SECURE Act to invigorate America's retirement saving practices, in part by eliminating a popular loophole known as the stretch payout.2 This loophole allowed beneficiaries of an inherited individ- 1 Setting Every Community Up for Retirement Enforcement Act (SECURE Act), incorporated into Further Consolidated Appropriations Act, Pub. L. No. 116-94, 133 Stat. 2534 (2020); J. Mark Iwry et al., The SECURE Act: A Good Start but Far More Is Needed, BROOKINGS (Jan. 8, 2020), https://www.brookings.edu/blog/up-front/2020/01/08/the-secure-act-a-good-start-but-far-more-is- needed/ [https://penna.cc/7G87-APFL]. 2 See Iwry et al., supra note 1 (explaining that the Setting Every Community Up for Retirement Enhancement Act (the SECURE Act) offers tax-favored savings options to encourage retirement sav- ing); Laura Saunders, Inheriting IRAs Just Got Complicated, Thanks to New Retirement Overhaul, WALL ST. J. (Dec. 20, 2019), https://www.wsj.com/articles/inheriting-iras-just-got-complicated-thanks- to-new-retirement-overhaul-11576904481 [https://perma.cc/JV4X-HFKR] (stating that the Act's sup- porters argue that an individual retirement arrangement (IRA) should predominately benefit the ac- count owners, not the beneficiaries); Chris Sonzogni, Setting Every Community Upfor Retirement Enhancement (SECURE)Act, INVESTOPEDIA (Aug. 23, 2020), https://www.investopedia.com/secure- 357