The Secure Stretch Trust is Dead?

Previously, I wrote about what I called the Secure Stretch Trust as a possible option to stretch IRA distributions beyond 10 years under the SECURE Act.

I also previously wrote about how trusts may be the best beneficiaries of IRAs under the SECURE Act.

And …

And talked about all of that on the Wealth and Law Podcast.

At the end of February 2022 the Department of the Treasury issued proposed regulations under the SECURE Act. The proposed regulations clarify many things concerning trusts as IRA beneficiaries. Overall the proposed regulations are welcome and quite well done.

One thing the proposed regulations clarify is that the ability to “stretch” an IRA under a Secure Stretch Trust structure is not possible.

In a small surprise, the Treasury has interpreted the new 10-Year rule for required minimum distributions to be an ultimate back stop to IRA required minimum distributions payable after the IRA owner’s death (who died after age 72).

The 5-Year Rule still can apply to IRAs whose owners died before age 72 and did not name a designated beneficiary.

Assuming the proposed regulations become final without significant changes, the Secure Stretch Trust structure could be no more, at least not as a structure that gains more than 10 years of stretching.

I’ll write more about trusts as IRA beneficiaries in the future, but for now I am cautiously assuming the Secure Stretch Trust option is coming to an end. No tears here, though. This is the nature of the law. Everything is final until it isn’t!

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