Person wearing a suit putting a coin into a piggy bank to save for retirement.

The SECURE Act: Changes for Retirement Accounts

The SECURE Act emerged from Congress in 2019 with overwhelming bipartisan support. An acronym for Setting Every Community Up for Retirement Enhancement, the SECURE Act represents the largest retirement reform for Americans in more than a decade.

And it poses significant concern for many retirees.

Having gone into effect on January 1, 2020, the 29 provisions of this new law bring legislative changes to retirement accounts that may cause previously drafted estate plans to be undesirable — if not potentially burdensome — for certain beneficiaries. Below are several key takeaways to be aware of.     

Three Key Provisions of The SECURE Act:

1. Delaying the beginning date for minimum distributions from an IRA.

First some potentially good news: the SECURE Act increased the beginning date for required minimum distributions (RMDs) to 72 years old. Previously, most adults with a traditional IRA were required to start taking RMDs by the year after they turned 70.5. With many adults retiring later in life, this change allows some additional time for IRA funds to continue growing before withdrawals must be taken.

Note this delay does not apply to those who already reached age 70.5 before the end of 2019 when the SECURE Act was not in effect. To avoid penalty for missing an RMD, please consult an estate planning attorney to discuss your scenario.

2. Removing the contribution restriction to a traditional IRA.

Adults working in their retirement years could not continue making contributions to a traditional IRA after the age of 70.5, under previous law.

The SECURE Act removed this restriction entirely and adults can now contribute at any age, as long as they are actively working and meet certain requirements. Limits are still in place to determine the maximum dollar amount that can be contributed each year for individuals and married couples.

3. Removing “stretch” provisions for most beneficiaries of an IRA.

In the past, individuals with an IRA account of $200K or more might structure their estate plan to provide tax-advantaged payouts for beneficiary trustees — often, a spouse, child(ren), grandchild(ren) or other heirs.

  • Under old law, a conduit or “pass through” trust could be named as the beneficiary of a retirement account. Trustees were then allowed to take RMDs over the course of their life expectancy, making the RMD each year very small. This is referred to as a “stretch” payout. The trustee would also pay taxes on the RMD, but the tax payments were stretched out over many years.
  • Under the SECURE Act, most trustees now only have 10 years to withdraw the entire balance of an inherited retirement account. Obviously, this results in larger distributions and much greater tax burden. The only trustees who are not subject to the new 10-year rule are beneficiaries who:
    • Are under the age of 18;
    • Have a disability or chronic illness; or,
    • Are not more than 10 years younger than the account owner, such as the sibling of an individual who has no spouse or children.

The Conduit Crisis: SECURE Act Implications for a Conduit Trust

As we stated above, the SECURE Act poses a significant challenge for individuals who have structured a conduit or “pass-through” trust in their estate plan. Instead of protecting the majority of an individual’s wealth through small RMDs to their heir(s) over time, the entire balance of an inherited retirement account must be liquidated within 10 years — and the income tax due will be greatly accelerated.

Many retirees are faced with a new dilemma: “How do I protect this retirement account for my heirs without creating a significant tax burden?” 

The answer? Review and amend your documents with an estate planning attorney as soon as possible. Together, you can determine what might happen to your retirement account. If a conduit provision was used, you may want to consider amending or updating to a different type of trust, such as a:

  • Standalone Retirement Trust (SRT;)
  • Irrevocable Life Insurance Trust (ILIT;) or,
  • Charitable Remainder Trust.

It may also be beneficial to do a Roth conversion of an existing IRA, or to cash out the IRA and buy life insurance — depending on your goals and unique family scenario.

Review Your Estate Plan with an Attorney Regularly

Understanding the impact of new legislation is just one of many reasons to review your estate plan with an attorney every few years. When it comes to your entire life’s savings and making a plan for your loved ones, this is not a “set it and forget it” type of scenario!

Other important reasons to revisit your estate plan include:

  • Life events in your family, such as birth, marriage, divorce, death or illness;
  • Making any changes to a child’s inheritance;
  • Adding or removing beneficiaries;
  • Appointing guardians or trustees;
  • Moving to a new state; and
  • Creating a succession plan for your business.

An attorney who specializes in estate planning and elder law can help identify the financial tools and strategies to best accomplish your goals, from funding long-term care in a skilled nursing facility to donating money for a charitable cause and more.

Your Local St. Charles Resource for Understanding the SECURE Act

At Beck & Lenox Estate Planning & Elder Law in St. Charles, our goal is to provide our clients with complete peace of mind. Our attorneys will meet with you in a complimentary consultation to understand your goals and help secure a prosperous future for your loved ones.

If your estate plan has not been updated recently, our firm has the expertise you need to navigate the SECURE Act and other recent legislation with confidence. To schedule your complimentary consultation, submit a request online or call our office at (636) 946-7899.


Our firm is now also offering secure virtual appointments for individuals with health concerns who cannot attend an in-person consultation. Read more about our updated COVID-19 policies and procedures to help guarantee your safety.

This article is not intended as a substitute for the legal advice of an attorney. Readers should consult with an attorney for matters concerning their estate and estate planning documents.