Contact us for a Free Initial Consultation 414-253-8500

The Impact of the SECURE Act on Retirement and Estate Planning: What You Need to Know

The SECURE (Setting Every Community Up for Retirement Enhancement) Act, signed into law in December 2019, has significantly changed retirement and estate planning in the United States. This article will provide a comprehensive guide to understanding the implications of the SECURE Act on retirement and estate planning and how you can adapt your strategies to accommodate these changes. If you need help navigating these changes, Heritage Law Office can provide knowledgeable guidance. Contact us either online or at 414-253-8500 to schedule a free consultation today.

How the SECURE Act Affects Retirement Savings

Increased Age for Required Minimum Distributions

Before the SECURE Act, individuals were required to start taking required minimum distributions (RMDs) from their retirement accounts at age 70½. The SECURE Act has increased the starting age for RMDs to 72, allowing individuals to defer taxes and potentially grow their retirement savings for a longer period.

Elimination of the Age Limit for Traditional IRA Contributions

Prior to the SECURE Act, individuals could not make contributions to a traditional IRA after turning 70½. The SECURE Act has removed this age limit, allowing individuals to continue contributing to their traditional IRA as long as they have earned income.

The Impact of the SECURE Act on Estate Planning

Changes to the "Stretch IRA" Strategy

The "stretch IRA" strategy allowed non-spouse beneficiaries of an inherited IRA to take distributions over their life expectancy, potentially stretching the tax-deferred growth of the inherited IRA over many years. The SECURE Act has altered this strategy by implementing a 10-year distribution rule for most non-spouse beneficiaries. This means that the entire inherited IRA must be distributed within ten years of the account holder's death, which can result in a larger tax burden for the beneficiary.

Exceptions to the 10-Year Rule

There are exceptions to the 10-year distribution rule for certain beneficiaries, known as "eligible designated beneficiaries." These include:

  • Surviving spouses
  • Minor children (until they reach the age of majority)
  • Disabled individuals
  • Chronically ill individuals
  • Individuals who are not more than ten years younger than the account holder

For these eligible designated beneficiaries, the stretch IRA strategy can still be utilized.

Adjusting Your Estate Planning Strategy

Given the changes brought about by the SECURE Act, it's important to review and potentially adjust your estate planning strategy. Some options to consider include:

Roth IRA Conversions

Converting a traditional IRA to a Roth IRA can be a strategic move to minimize the tax burden on your beneficiaries. While the conversion itself is a taxable event, distributions from a Roth IRA are generally tax-free.

Utilizing Trusts

Establishing a trust can provide more control over the distribution of your assets, which can be especially helpful in light of the changes to the stretch IRA strategy. An experienced attorney can help you navigate the complexities of trust creation and determine if it's a suitable option for your estate plan.

Contact an Experienced Attorney to Discuss the SECURE Act and Your Estate Planning Needs

If you need assistance understanding and adapting your estate planning strategy to the changes brought about by the SECURE Act, the knowledgeable attorneys at Heritage Law Office can help. We offer remote, phone, and online appointments, so you can receive our services wherever you are. To discuss your estate planning needs with an experienced attorney, contact Heritage Law Office by using the online form or calling us directly at 414-253-8500.

Contact Us Today

For a comprehensive plan that will meet your needs or the needs of a loved one, contact us today. Located in Downtown Milwaukee, we proudly provide legal advice to those in Milwaukee County and surrounding communities.

Milwaukee Office
757 N. Broadway, Suite 300
Milwaukee, WI 53202
Minneapolis Office
Minneapolis, MN 55104
414-676-2787 (fax)
1 more location