The  “Setting Every Community Up for Retirement Enhancement” Act, -or SECURE Act- is a tax law that became effective January 1, 2020. This  legislation greatly impacted various aspects of retirement accounts and how they are distributed to non-spouse beneficiaries. 

KEY Points 

There are many things that went into the SECURE Act, below are the major provisions you should be aware of:

  • Increased the age for required minimum distributions (RMDs) on retirement accounts from 70 ½ to 72
  • Eliminated the age limit on contributions to traditional IRAs
  • Increased annuity options within retirement plans
  • Eliminated “stretch” IRA options for most non-spouse beneficiaries and replaced with a 10-year mandatory withdrawal rule
    • Exceptions apply to those who are “eligible designated beneficiaries”:
      • Spouses
      • Chronically ill
      • Disabled
      • Beneficiaries no more than 10 years younger than the account owner
      • Account owner’s minor children, until they reach the “age of majority” (In Colorado, the “age of majority” is 18 years old)

How can this impact my estate plan?

The main impact the SECURE Act has on estate plans is the elimination of the “stretch” IRA option. Previously, beneficiaries were allowed to withdraw minimum amounts from inherited accounts based on their life expectancy. 

However, non-spouse beneficiaries are now required to withdraw all inherited account balances by December 31 of the 10th year after the account holder’s death, unless an exception listed above applies to them.

We understand that each estate plan varies greatly. So, to make the proper provisions in your customized plan, an experienced attorney will need to advise according to your situation. 

How can Mason Law help?

If you have questions or are unsure if your plan has been updated, call our office and ask a team member. If your estate plan still requires updating to reflect SECURE Act changes, we will make the necessary adjustments and schedule a time for you to sign the new documents. 

We are here to help you in every way we can. However, if your questions are in regards to tax implications, we ask that you direct those towards a Financial Advisor and/or Certified Public Accountant (CPA).

If you believe you have a case call us at (719) 292-1888 to speak to an experienced attorney from our firm.