How much will the SECURE Act Cost Your Family?

Before the days of the “Setting Every Community Up for Retirement Enhancement” (SECURE) Act, non-spouse beneficiaries of IRAs and other retirement accounts, such as 401(k)s could slowly take distributions from IRAs over their entire lifetime, and even beyond that for several more years to grandchildren. Even after tax, your beneficiary would end up pocketing more than the original inherited IRA was worth! If an IRA was left to a grandchild, their total lifetime withdrawals could be several times the original amount they inherited. All they had to do was just take out their Required Minimum Distributions each year. The SECURE Act has put an end to that in a big way, and your family are the losers. 

Most non-spouse beneficiaries of IRAs now are forced to withdraw the full amount of the inherited IRA within 10 years. The result? Your children will net, after tax, between 40% and 47% less than they would under the old law. Your grandchildren will net about 81% less than under the old law. And since they’re taking larger distributions, the beneficiary may be pushed into a higher tax bracket. The IRS wants your IRA to only be a vehicle for your retirement, and not a valuable legacy to pass on to younger generations. 

Exceptions to Non-Spouse Beneficiaries

The 10-year rule does not apply to all non-spouse beneficiaries. The exceptions are as follows:

  • Beneficiaries who are not more than 10 years younger than the IRA owner
  • Minor children
  • Disabled or chronically ill individuals

Typically, these beneficiaries are still required to make minimum withdrawals based on the remaining years of life expectancy. For example, a disabled beneficiary who is expected to live 40 more years after the plan participant’s death must withdraw at least 1/40th of the IRA amount the first year, 1/39th the next year, and so on. 

What Can Be Done About It?

Even before the Secure Act was passed, we began planning ways to restore the value of your IRA. The good news is that there are several methods now to avoid the losses to your family caused by the Secure Act. Call us now, while this new tax threat is on your mind, to schedule a conversation about your individual situation. We may even be able to reduce your taxes now.


Regardless, the most effective way to pass on as much as your wealth as possible is to consult an experienced and knowledgeable estate planning attorney. Our team is well-prepared to offer you and your family advanced estate planning so your assets and hard work are protected. We’re with you for the long haul, especially because the law does change from time to time. Call our firm today at 215-997-9773 to set up an appointment and discuss your options.

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HighPoint Law Offices PC

At HighPoint Law Offices we support individuals, families, and businesses of all backgrounds with estate planning services that address their unique wishes, goals, and challenges.

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