Secure Act 2.0: Benefits for Surviving Spouses
Sixth in a series of articles addressing key components of the SECURE 2.0 Act, which became law on Dec. 29, 2022
By Christopher Wolff
The SECURE 2.0 Act includes major retirement plan changes designed to strengthen the financial readiness of Americans to retire. The changes resulting from the SECURE 2.0 Act will be phased in, with some beginning in 2023 and most becoming effective in 2024 and beyond.
This article focuses on the key changes related to surviving spouses and their inherited retirement accounts.
Prior Options for Surviving Spouses
Before the passage of SECURE Act 2.0, a surviving spouse had two basic options when they inherited their deceased spouse’s IRA. First, they could roll the IRA into their own, thus treating the IRA as their own. Or, second, they could remain as a beneficiary of their spouse’s IRA.
The SECURE Act 2.0 introduced an additional option: Surviving spouses can now elect to be treated as the deceased spouse.
What the New Option Means
If the surviving spouse chooses to be treated as the deceased spouse, the following are affected:
- Delayed Required Minimum Distributions (RMDs). The surviving spouse can delay taking RMDs until the age when the deceased spouse would have been required to start taking RMDs.
- Uniform Lifetime Table. The surviving spouse will use the Uniform Lifetime Table rather than the Single Lifetime Table to calculate their RMDs. The advantage here is that the Uniform Lifetime Table generally provides lower RMD amounts, which means the surviving spouse can potentially take the distributions over a longer period.
- Subsequent Beneficiaries. If the surviving spouse dies before the age at which they are required to take RMDs, their beneficiaries will be treated as the original beneficiaries. This provision may allow the retirement account’s tax-deferred growth to continue longer, thus benefiting subsequent generations.
The change to provisions for surviving spouses under SECURE Act 2.0 would primarily benefit situations where the deceased spouse is younger than the surviving spouse. It provides the surviving spouse, especially one who has many years before RMDs kick in, with an opportunity to continue growing the retirement account on a tax-deferred basis. This benefit, combined with the use of the Uniform Lifetime Table for calculating RMDs, potentially extends the longevity of the surviving spouse’s retirement benefits and may reduce tax liability.
SECURE ACT 2.0 Summary
The 2019 version of the SECURE Act (Setting Every Community Up for Retirement Enhancement Act) introduced changes to retirement planning designed to put U.S. workers in a better position when they retired. The SECURE 2.0 Act, enacted in 2022, provided several updates and additions. Among them:
You can find more details about each of these by visiting the Knowledge Center on our website or by contacting your Country Club Trust Company representative.
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