When Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act in 2020, it introduced some of the most significant updates to retirement law in decades (1). While the name sounds reassuring, the law also brought new rules — and a fair amount of complexity.
For retirees and those nearing retirement, even a small misunderstanding could lead to unexpected tax issues or penalties.
Here’s what you need to know, and why this law still matters for anyone preparing for their financial future.
1. A New Starting Line for RMDs
Under the SECURE Act, you now need to begin taking Required Minimum Distributions (RMDs) from your retirement accounts at age 72, instead of 70½ (2).
That extra year and a half gives your money more time to grow tax-deferred, which may sound like good news. But it also means you’ll have fewer years to spread out those withdrawals, possibly resulting in larger taxable distributions later.
If you’re collecting Social Security or pension income, those RMDs could push you into a higher tax bracket when they begin (2). Timing and coordination matter more than ever.
2. Goodbye, “Stretch” IRA — Hello, 10-Year Rule
For years, many families used the “Stretch IRA” strategy to pass down wealth efficiently. It allowed heirs to take smaller distributions over their lifetimes, helping reduce taxes and extend growth potential.
The SECURE Act changed that. Now, most non-spouse beneficiaries must withdraw the entire account within 10 years of inheriting it (3).
There are still exceptions — including surviving spouses, minor children, disabled or chronically ill beneficiaries, and those less than ten years younger than the account owner (3). But for many families, this change means faster taxation and less time for growth.
If your estate strategy or trust was created before 2020, it may be a good idea to review it with an estate planning attorney to help ensure it still aligns with your goals and current law.
3. New Rules, New Opportunities
The SECURE Act didn’t just change the rules — it introduced more than 29 new provisions aimed at helping Americans save for retirement (1).
Here are a few highlights:
- Small businesses can now band together to offer retirement plans more easily (1).
- Part-time employees may be eligible to join 401(k) plans after meeting certain requirements (1).
- New parents can take out up to $5,000 from retirement accounts penalty-free to cover birth or adoption costs (1).
These updates were intended to make saving more accessible — but they also add layers of detail that can be complex. Knowing which rules apply to you may make a meaningful difference in your long-term financial strategy.
4. Why You Might Need to Revisit Your Estate Strategy
If your retirement strategy includes trusts, the SECURE Act may have changed how they function — especially for inherited IRAs (3).
Some older “see-through” trusts that were designed to stretch out IRA distributions could now require heirs to withdraw funds within 10 years, creating an unexpected tax bill (3).
If your estate strategy was created before 2020, this may be a good opportunity to meet with a professional to help ensure your approach aligns with your goals and today’s rules.
The Bottom Line
The SECURE Act was intended to help make saving for retirement easier, but it also reshaped the rules in ways that can affect nearly every retiree. From new RMD timelines to changes in inheritance rules and expanded access to retirement savings options, understanding these updates may help you make more informed financial decisions.
Are your current retirement and estate strategies still aligned with today’s rules? Have you checked whether your trusts or beneficiaries are up to date?
Understanding the SECURE Act isn’t just about following the law — it’s about helping your savings last throughout retirement.
If you’d like to review how these changes may impact your financial picture, consider scheduling a complimentary meeting to go over your retirement and estate strategies under the new law. A short conversation today could help you identify potential opportunities or risks.
Sources
(1) U.S. Congress. Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, Public Law No. 116-94, 133 Stat. 2534.
(2) Internal Revenue Service. “Retirement Topics — Required Minimum Distributions (RMDs).” IRS.gov, 2024.
(3) U.S. Department of the Treasury. “Inherited IRA Rules Under the SECURE Act.” Treasury.gov, 2024.
(4) U.S. Department of Labor. “Understanding the SECURE Act.” DOL.gov, 2023.
This material is for informational purposes only and is not intended to provide specific tax, legal, or investment advice. Individuals should consult with a qualified tax advisor, estate planning attorney, and/or financial professional for guidance based on their personal circumstances.
The information provided reflects current understanding of the SECURE Act as of 2024 and may be subject to change due to future legislation or IRS interpretation.
Any references to financial strategies or opportunities are not guarantees of future results. Participation in retirement accounts and distribution rules may vary based on individual circumstances and current regulations.
