Skip to Content

Secure Act – Partial Elimination of Retirement Plan Stretch-Outs | FFS Insights

On December 20, 2019, President Trump signed into law the “Setting Every Community Up for Retirement Enhancement” Act (“SECURE Act”), which became effective as of January 1, 2020. The SECURE Act made changes to the rules for making distributions from IRAs, ROTH IRAs, qualified retirement plans, and similar accounts (“Retirement Plans”), as briefly described below, which can have a significant impact on estate planning.


If a person passed away before 2020 leaving a Retirement Plan to a beneficiary, then that beneficiary was generally allowed to stretch out the distributions from that Retirement Plan over the beneficiary’s entire lifetime. For many of our clients, those Retirement Plans were payable to a trust for the benefit of that beneficiary, which trust had special provisions (“Conduit Trust Provisions”) that allowed for the stretch out of the distributions from the Retirement Plans over the beneficiary’s lifetime, but did not allow the beneficiary to take the whole Retirement Plan out in one lump sum. This was prudent planning, both from an income tax perspective and a beneficiary protection perspective, under the prior laws.


Now, the new SECURE Act has partially eliminated the stretch out of distributions from Retirement Plans by allowing a stretch out of only 10 years of distributions from a Retirement Plan for an owner who dies after 2019 (with certain exceptions for distributions to spouses, chronically ill and disabled beneficiaries, minor children, and persons who are less than 10 years younger than the Retirement Plan owner). This means that most non-spouse beneficiaries will have only 10 years to take full distribution from an inherited Retirement Plan, and that those beneficiaries must therefore pay all the income taxes on the inherited Retirement Plan within 10 years.

As a result, those clients who have incorporated Conduit Trust Provisions into their trusts may not achieve their intended goal, i.e., a beneficiary may receive all of the Retirement Plan monies within 10 years of the client’s death, instead of receiving distribution over the beneficiary’s lifetime or some other period greater than 10 years.

We urge you to review your estate plans with your attorney to discuss potential alternatives for naming beneficiaries of your Retirement Plans to achieve the best income tax and beneficiary protection results given the imposition of the new SECURE Act.


Starting in 2020, an individual need not begin taking required minimum distributions from their Retirement Plan until reaching age 72. HOWEVER, IF YOU TURNED 70½ IN 2019, YOU STILL HAVE TO TAKE YOUR REQUIRED MINIMUM DISTRIBUTION BEFORE APRIL 1, 2020.

Also, starting in 2020, an individual can contribute to a traditional IRA as long as the individual has compensation (generally earned income from wages or self-employment), even if the individual is age 70½ or older.

Again, we strongly recommend that you contact a member of Freeman, Freeman and Smiley, LLP’s Estate Planning group to discuss how the SECURE Act affects your personal planning.


The information contained in this alert is for general educational purposes only and is not designed, nor intended, to be used as the singular source of information to analyze a legal issue. Please contact legal counsel to discuss any specific questions you may have.