An estimated 33,000 federal workers have accumulated $1 million or more in their Thrift Savings Plan accounts, which are often rolled into IRAs.
The Secure Act does have exceptions to its 10-year stretch IRA timetable for heirs. Surviving spouses would be exempt from the accelerated payout, as would heirs who qualify as disabled or are chronically ill. The 10-year timetable would start for minor children (but not grandkids) only after they hit the age of majority.
Overall, most money in IRAs—about three in four dollars, according to congressional estimates—would be unaffected.
Yet that leaves the remaining 25% of IRA funds affected by a reduction in tax benefits.
What’s alarming, too, is how little attention this provision has received, The Wall Street Journal said.
“The rules on retirement savings constitute a kind of social contract that shouldn’t be hastily broken,” the newspaper said. “Particularly as Social Security and Medicare slink toward insolvency, Congress may be tempted to fiddle with the laws on 401(k) plans and IRAs. It’s a way for lawmakers to gin up revenue while pretending they aren’t raising taxes. The political class wants more control over America’s individual savings and investments.”