Steimle Birschbach, LLC

The Secure Act

The Secure Act– How It Affects You And Your Family

By: Thomas A. Griesbach © 2020

In the last few weeks of 2019, Congress passed the SETTING EVERY COMMUNITY UP FOR RETIREMENT ENHANCEMENT ACT OF 2019 (the “SECURE ACT”) which, among other things, made drastic changes to the rules governing inherited retirement accounts. For many of us, our largest assets are our retirement accounts, and so the SECURE ACT greatly affects many of our estate plans.

Under the pre-SECURE ACT rules, most individuals who inherited a retirement account could withdraw the funds over their life expectancy, as yearly-required minimum distributions, deferring tax payment and spreading tax liability over many tax years, resulting in less dollars paid to Uncle Sam.

The SECURE ACT gets rid of the life expectancy payout option and replaces it with a ten-year rule. Under the ten-year rule, all funds in an inherited retirement account must be withdrawn by December 31 st of the year containing the tenth anniversary of the employee’s death. There is an exception for persons who qualify as Eligible Designated Beneficiaries. A surviving spouse, minor child, disabled individual, chronically ill individual, and person not less than 10 years younger than the employee are Eligible Designated Beneficiaries, and may still elect a life expectancy payout.

I should caution that like most laws, it is not this simple. For example, a minor child is only an Eligible Designated Beneficiary until they reach the age of majority (at which point the ten-year rule kicks in), and there are specific definitions for disabled and chronically ill individuals. In addition, there is still a “no-designated beneficiary” trap which can result in a five-year withdrawal deadline and the spousal rollover option still remains available to a surviving spouse.

For those of us with modest sized retirement accounts and a number of children, the SECURE ACT may have little effect on our estate plans. For those of us with large retirement accounts and/or few children, plans to leave retirement funds (ROTH or Traditional) to grandchildren, or those who have designated a trust as beneficiary of their retirement assets, the SECURE ACT may have drastic implications. If you would like to discuss how the SECURE ACT affects your situation and possible solutions, a member of the Steimle Birschbach, LLC Estate Planning Team would be more than willing to conference with you. Please contact us directly at 

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This blog post is provided for informational purposes only and by its very nature is general. This information is not intended as legal advice.