We want a society where we have safe roads, low crime, good public schools and, for times when people fall short financially, a safety net. Our taxes support Medicare, Medicaid and Social Security, which we know have kept millions of seniors out of poverty.

Fifty-seven percent of retirees say Social Security is their major source of income, according to a 2019 Gallup poll. But the ugly truth about taxes is that many people hate giving up income to provide for services that make their lives and those of others better.

Enter the collective public good of encouraging people to save for retirement by giving them tax breaks. If you save in a 401(k) or similar workplace retirement plan — referred to as a defined contribution plan — you can divert untaxed income into an investment account that grows tax-deferred. Employees pay taxes when earnings and contributions are withdrawn.

The added benefit is that money put into a 401(k) lowers a worker’s taxable income. Or maybe you qualify to invest in a Roth IRA or Roth 401(k). You make after-tax contributions to this type of account, but returns are not taxed upon withdrawal.

In either case, upfront or later, the intent was for people to pay taxes on the money they invest for retirement. But what about the folks who inherit these retirement accounts? Do they deserve to benefit from a favorable tax treatment? This is where the Secure Act comes in.

Starting Jan. 1, a new provision affects IRAs or 401(k) accounts left to beneficiaries. There’s now a 10-year window for beneficiaries to draw down the inherited account.

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