WATCH: How the Federal SECURE Act Could Affect Your Retirement and Estate Planning

Employees across the third-party logistics industry are planning for their retirement and thinking about the future they will leave for their children and grandchildren. But soon, Congress could pass legislation called the SECURE Act which would drastically change the game for people planning to leave their IRA to their inheritors.

Last week, TIA held a webinar on the SECURE Act and how its elimination of the “stretch IRA” could affect your ability to plan for your inheritors’ financial futures. The webinar featured Paula Calimafde, an attorney with more than 35 years of experience advising families and businesses on estate planning and retirement planning. Click here to watch a recording of the webinar.

A stretch IRA extends the tax-deferred status of an inherited IRA when it is passed to a non-spouse beneficiary, like a child or grandchild, allowing for continued tax-deferred growth over the inheritor’s lifetime. This provides them with a steady stream of income while also spreading out the tax they must pay on the IRA distributions.

The SECURE Act, which the House of Representatives passed in May and the Senate could vote on by the end of the year, would limit the stretch period for IRAs to 10 years for the vast majority of non-spousal beneficiaries, requiring the account to be fully distributed – and the inheritor to pay the full tax on those distributions – within that timeframe. This would deprive inheritors of potentially decades’ worth of investment income and would also greatly increase their tax burden.

TIA continues to engage with Senate leadership in advance of a potential vote on the SECURE Act. Earlier this month, TIA sent a letter to Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and Ranking Member Ron Wyden (D-Ore.) urging them to amend or remove the stretch IRA provisions from the SECURE Act so that Americans in the 3PL industry can continue to save in their retirement plans without fearing they will leave their children or other beneficiaries with a new and significantly larger tax burden.

If you have any questions, please contact TIA Advocacy at advocacy@tianet.org or 703.299.5700.