McClellan Legal LLC Estate Planning & Tax Assessment Blog

Friday, January 17, 2020

How the SECURE Act Impacts Your Retirement Planning

In late December, 2019, The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law and became effective in early January, 2020. The SECURE Act contains both benefits and drawbacks that may lead you to reconsider your retirement planning.


The SECURE Act increases the forced withdrawal age from 70.5 to 72 years old. This means that you can wait an extra year and a half before taking out any money from your retirement accounts, unless you have reached age 70.5 by the end of 2019. In that case, you must still take out your RMDs at the previous age limit, 70.5. This change will be beneficial for those who would rather have their money stay in the account so it may continue to grow tax deferred.

Additionally, the SECURE Act removes age limits on the contributions for traditional IRAs. If you earn income after you reach age 70.5, you may continue to contribute to your IRA. Again, there is an exception here if you have reached age 70.5 by the end of 2019.


The negative impact of the SECURE Act is the limitation of the required minimum distribution (RMD) stretch for your non-spouse beneficiaries, such as your children or grandchildren. Stretching the RMD is a common practice in estate planning, as it allows your beneficiaries to spread out the distributions throughout their lifetime. Now, if the beneficiary is over 21, then the IRA would have to be distributed within 10 years of the account owner’s death. Please note that this rule only applies to beneficiaries if the account holder has passed after 2019.

Of course, there are exceptions to the limited 10-year stretch. If the beneficiary is no more than 10 years younger than the account owner, or if the beneficiary is ill or disabled, then he or she may continue to stretch the RMDs. Furthermore, if the beneficiary is a minor, this decade-long clock will not start until the child reached the age of 21.

For example, if the beneficiary is 28 years old at the time the account owner passed, then the beneficiary will have to take out his or her share of the retirement account by the age of 38. If the beneficiary is a minor at the time the account owner passed, then he or she will be able to stretch his or her RMDs until age 31.

How You Can Protect Your Retirement Assets

Even though the non-spouse beneficiary may still have a 10-year stretch on his or her RMDs, he or she may still take out his or her share as a lump sum despite the tax implications. You may want to execute a Retirement Trust to ensure that your beneficiaries utilize this stretch, which would both allow the account to grow and minimize any tax implications.

If you would like to discuss your current retirement planning in light of the SECURE Act, please call us at 610-444-5552. We will be more than happy to schedule a free initial meeting with you to review the ways estate planning can help.

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McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.

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