SECURE Act Retirement Changes

The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and SECURE 2.0 (2022) made the most significant changes to US retirement rules in decades. Many existing strategies stopped working; new ones became available.

This page covers the changes and the planning implications.

SECURE Act (2019)

RMD age delayed to 72

Previously: 70.5. After SECURE Act: 72.

Provides more years of tax-deferred growth before forced distributions.

Stretch IRA mostly eliminated

Previously: non-spouse beneficiaries could distribute inherited IRA over their lifetime, "stretching" tax deferral over decades.

After SECURE Act: non-spouse beneficiaries must distribute the entire inherited IRA within 10 years.

Exceptions ("eligible designated beneficiaries"):

- Surviving spouse (still has spousal options)

- Minor child of decedent (until age of majority + 10 years)

- Disabled or chronically ill beneficiary

- Beneficiary not more than 10 years younger than decedent

For most non-spouse heirs (typically adult children), 10-year payout is the rule.

Implications

- Adult children inheriting IRAs face compressed taxation

- Tax planning at the inheritance level becomes more important

- Roth IRAs more valuable as inheritance vehicles

Other changes

- Removed maximum age for IRA contributions (was 70.5)

- Allowed penalty-free $5K withdrawal for new births/adoptions

- Increased small business retirement plan availability

SECURE 2.0 (2022)

RMD age phased to 75

- 2023-2032: RMD at 73

- 2033+: RMD at 75

For someone turning 72 in 2025: RMD at 73 (in 2026).

For someone turning 72 in 2034: RMD at 75 (in 2037).

Provides additional years of deferral.

Catch-up contributions

Increased catch-up contributions for ages 60-63 (super catch-up):

- 401(k): higher of $10K or 150% of standard catch-up (2025: $10K)

- IRA: similar increase

For workers in these specific ages, dramatic contribution increases possible.

Roth required for high earners

Catch-up contributions (50+) for high earners ($145K+ in 2024 dollars) must be Roth, not traditional. Phased in.

Reduces traditional contribution flexibility for high earners but increases Roth balances.

529 to Roth IRA rollover

Up to $35K of unused 529 balance can be rolled to a Roth IRA in the beneficiary's name. Subject to:

- 529 must have been open 15+ years

- Annual limit equals annual Roth contribution limit

- Funds in 529 for 5+ years

- Beneficiary must have earned income up to rollover amount

Major change: significantly reduces 529 over-funding risk.

See [FiveTwentyNinePlansAndEducationSavings](FiveTwentyNinePlansAndEducationSavings).

Other 529 changes

- Increased K-12 tuition use (still $10K/year)

- Apprenticeship programs eligible

- Student loan repayment ($10K lifetime per beneficiary)

Roth 401(k) RMDs eliminated

Roth 401(k) accounts no longer have RMDs (they didn't make sense; Roth IRAs already didn't have them).

For retirees with Roth 401(k) balances: can leave them growing without forced distributions.

Auto-enrollment requirements

New employer plans (post-2025) must auto-enroll employees. Higher participation rates expected.

Emergency savings

Up to $2,500 in retirement plans can be designated as emergency savings (special "side car" account). Penalty-free access.

Student loan match

Employers can match employee student loan payments as if they were 401(k) contributions. Doesn't help all employees but provides coordination.

Planning implications

For pre-retirees

Stretch-IRA replacement

Adult children inheriting traditional IRAs face 10-year tax compression. Strategies:

- Roth conversions during retiree's lifetime (paying tax at retiree's rate)

- Charitable bequests of traditional IRA balances

- Life insurance instead of IRA inheritance

For retirees expecting to leave substantial traditional balances, the math has shifted toward Roth conversion.

RMD planning

With RMD pushed to 73-75, the "low-tax window" (between retirement and RMDs) is longer. Roth conversion ladder during this window is more valuable.

Catch-up contributions

For workers 60-63 (super catch-up): use them. Significantly more retirement saving capacity.

Roth requirements for high earners

For high earners (50+ catch-up): must be Roth. Plan tax accordingly.

For inheritors

10-year compressed distribution. Strategies:

- Distribute evenly over 10 years (smooths tax brackets)

- Distribute in low-income years (early retirement, sabbatical)

- Keep deferring 10 years and take all at year 10 (often worse tax-wise)

For 529 owners

Concerns about over-funding largely resolved. Reasonable to fund 529 more aggressively knowing the Roth-rollover safety net exists.

For estate planners

Bigger reasons to consider Roth strategies. Inherited Roth doesn't have the 10-year tax pressure (heirs still must distribute within 10 years but the distribution is tax-free).

Specific strategies post-SECURE

Roth conversion ladder during retirement

Retiree converts traditional → Roth in low-tax retirement years. By RMD age, traditional balance is smaller; RMDs lower; tax-free Roth grows for heirs.

Particularly valuable given 10-year inheritance rule.

Charitable IRA strategy

For charitably inclined retirees with large traditional balances: Qualified Charitable Distributions (QCDs) to charity reduce balance + provide tax-free transfer.

After death, remaining traditional IRA can name charity as beneficiary (tax-free for charity; the beneficiaries who would face 10-year compression are skipped).

Mega-backdoor Roth

For high earners with willing employers: contributions to after-tax 401(k) → in-plan Roth conversion. Massive Roth contributions beyond standard limits.

Consolidated retirement planning

The SECURE changes have made tax diversification (traditional + Roth + taxable) more valuable. Plans heavy in traditional are at higher risk of compressed inheritance taxation.

Common failure patterns

Continuing pre-SECURE strategies

Strategies built around stretch IRA no longer work. Update plans.

Over-funding traditional for retirement only to leave compressed inheritance

For wealthy retirees, traditional IRA inheritance compression can mean heirs in higher brackets paying significant tax.

Roth conversion in low-tax retirement years addresses this.

Missing super catch-up

Workers 60-63 not aware of the larger contribution limits.

Treating 529 as locked

The Roth rollover provision changes the calculus. Funding can be more aggressive.

Ignoring auto-enrollment opt-outs

For new plans: employees auto-enrolled. Some opt out. Default for most: stay in.

Future expected changes

The SECURE Act trajectory continues. Each Congress could add more changes:

- Further RMD adjustments

- Catch-up contribution changes

- Roth requirements

- Inheritance rule refinements

Planning should be flexible enough to adapt.

A reasonable approach

For retirees and pre-retirees:

1. Update plans for current rules (post-SECURE 2.0)

2. Roth conversion ladder during low-tax retirement years

3. Tax diversification across traditional, Roth, taxable

4. 10-year inheritance rule factored into estate plans

5. Super catch-up in 60-63 if applicable

6. Charitable IRA strategy if charitably inclined and substantial traditional balance