The SECURE Act: What Changed and Why Retirees Need to Pay Attention
In December 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act — the SECURE Act. Then in December 2022, they followed up with SECURE 2.0. Together, these two laws represent the most significant changes to retirement rules in decades. Some changes are genuinely helpful. Others created expensive new traps, especially for anyone planning to leave an inheritance.
Here's what you need to know, in plain English.
The End of the Stretch IRA (SECURE Act 2019)
This is the big one. Before the SECURE Act, if you inherited an IRA from a parent, you could "stretch" the required withdrawals over your own life expectancy. A 40-year-old inheriting a $500,000 IRA might take small withdrawals — maybe $12,000 in the first year — letting the rest continue to grow tax-deferred for decades.
After the SECURE Act: Most non-spouse beneficiaries must now empty the inherited IRA within 10 years of the original owner's death. No more stretch. No more decades of tax-deferred growth.
Why This Hurts: A Concrete Example
Janet, age 50, inherits her mother's $600,000 traditional IRA in 2024.
Under the old rules: Janet could stretch withdrawals over roughly 34 years (her remaining life expectancy). First-year RMD: about $17,600. Total taxes paid over the stretch period at a 22% rate: roughly $132,000 (with the account growing along the way).
Under the new 10-year rule: Janet must withdraw the entire $600,000 by 2034. If she takes equal distributions of $60,000 per year, that income stacks on top of her salary, potentially pushing her into the 32% or 35% bracket. Total taxes paid: potentially $180,000–$210,000 — and she loses decades of tax-deferred compounding.
Planning tip: If you expect to inherit a traditional IRA, consider whether the account owner should do Roth conversions before death. The owner pays tax at their rate (often lower in retirement), and the inherited Roth IRA can be withdrawn tax-free over the 10-year period.
Who's Exempt from the 10-Year Rule?
Certain "eligible designated beneficiaries" can still use the stretch:
- Surviving spouses (they have the most options — can roll it into their own IRA)
- Minor children of the account owner (but only until they reach the age of majority, then the 10-year clock starts)
- Disabled or chronically ill beneficiaries
- Beneficiaries who are no more than 10 years younger than the deceased
Everyone else — adult children, siblings, friends, most trusts — is subject to the 10-year rule.
Required Minimum Distributions: New Ages (SECURE 2.0)
Both laws pushed back the age when you must begin taking Required Minimum Distributions (RMDs):
| If you were born... | RMD starting age |
|---|---|
| Before July 1, 1949 | 70½ (old law) |
| July 1949 – Dec 1950 | 72 |
| Jan 1951 – Dec 1959 | 73 (SECURE 2.0) |
| Jan 1960 or later | 75 (SECURE 2.0) |
Why this matters: Delaying RMDs gives your tax-deferred accounts more years to grow. If you were born in 1960, you now have until age 75 before the government forces withdrawals. That's five extra years compared to the old age-70½ rule — a significant planning window for Roth conversions, tax bracket management, and IRMAA avoidance.
Example: Robert, born in 1962, retires at 65 in 2027. Under the old rules, he'd start RMDs at 70½ (2032). Under SECURE 2.0, he doesn't start until 75 (2037). That's five extra years to convert traditional IRA money to Roth at potentially lower tax rates before RMDs kick in and force his income higher.
Reduced Penalties for Missed RMDs
Previously, if you forgot to take your RMD, the IRS penalized you 50% of the amount you should have withdrawn. Miss a $30,000 RMD? That's a $15,000 penalty.
SECURE 2.0 reduced this penalty to 25%, and further to 10% if you correct the error within two years. It's still painful, but far less catastrophic.
Roth Employer Contributions (SECURE 2.0)
Before SECURE 2.0, all employer matching contributions to 401(k) plans went into the traditional (pre-tax) side — even if you made Roth employee contributions.
Now: Employers can deposit matching contributions directly into a Roth 401(k) account. You'll pay tax on the match in the year it's contributed, but all future growth is tax-free.
Who benefits: Younger workers and anyone who expects to be in a higher tax bracket in retirement. If you're currently in the 22% or 24% bracket, paying tax on employer matches now to get tax-free growth for 20+ years is often a good trade.
Catch-Up Contribution Changes
SECURE 2.0 made catch-up contributions more generous — and more complicated:
- Ages 50–59: Can contribute an additional $7,500 per year to a 401(k) (standard catch-up)
- Ages 60–63: Can contribute up to $11,250 per year as a "super catch-up" (starting in 2025)
- Roth requirement for high earners: Starting in 2026, if you earned more than $145,000 in the prior year, your catch-up contributions must go into a Roth account. No more pre-tax catch-up contributions for high earners.
Example: Susan, age 61, earns $160,000. In 2025, she can contribute $23,500 (regular limit) plus $11,250 (super catch-up) = $34,750 to her 401(k). Starting in 2026, the catch-up portion must be Roth. This is actually beneficial for Susan if she expects higher tax rates later, since her Roth contributions will grow tax-free.
529-to-Roth Rollover (SECURE 2.0)
Starting in 2024, you can roll unused 529 college savings plan funds into a Roth IRA for the 529 beneficiary, subject to these rules:
- The 529 account must have been open for at least 15 years
- Contributions made in the last 5 years (and their earnings) are not eligible
- Annual rollovers are limited to the Roth IRA contribution limit ($7,000 in 2025)
- Lifetime maximum rollover: $35,000
Why it matters: Parents who overfunded a 529, or whose child received scholarships, now have an escape valve. Instead of paying penalties to withdraw the excess, they can seed a Roth IRA for their child — potentially worth $200,000+ by retirement if invested early.
Emergency Savings Provisions
SECURE 2.0 created several new ways to access retirement funds in emergencies without the usual 10% early withdrawal penalty:
- Emergency personal expense withdrawal: Up to $1,000 per year, penalty-free, for unforeseeable expenses. Must repay within 3 years to take another.
- Domestic abuse withdrawal: Victims of domestic abuse can withdraw up to $10,000 (indexed for inflation) or 50% of the account, whichever is less.
- Terminal illness: Penalty-free withdrawals for those diagnosed with a condition expected to result in death within 84 months.
- Disaster recovery: Up to $22,000 for federally declared disasters.
- Emergency savings accounts: Employers can create linked emergency savings accounts within retirement plans, capped at $2,500, funded by employee Roth contributions.
Automatic Enrollment (SECURE 2.0)
Starting in 2025, new 401(k) and 403(b) plans must automatically enroll employees at a contribution rate between 3% and 10%, with automatic escalation of 1% per year up to at least 10% (maximum 15%). Employees can opt out.
This change primarily affects younger workers, but it means more Americans will have retirement savings — and more of your adult children and grandchildren will be building 401(k) balances by default.
The Planning Takeaway
The SECURE Act and SECURE 2.0 together create both opportunities and urgency:
If you have a large traditional IRA and plan to leave it to your kids, consider a multi-year Roth conversion strategy now. Paying taxes at your rate may be far cheaper than forcing your heirs to empty the account in 10 years at their peak-earning tax rates.
If you're between retirement and age 75, you have a valuable window to do Roth conversions before RMDs start. Don't waste it. Use our Roth Conversion Simulator to see the long-term tax impact.
If you're still working and over 60, take advantage of the super catch-up contributions. The extra $3,750 per year (over the standard catch-up) adds up quickly.
If you have a 529 with leftover funds, start the clock on the 15-year holding period for the Roth rollover option.
If you're an heir, understand the 10-year rule and plan your withdrawals strategically. Taking equal amounts over 10 years is usually better than waiting until year 10 and taking a massive lump sum.
This article summarizes provisions of the SECURE Act (2019) and SECURE 2.0 Act (2022). Consult a tax professional for advice specific to your situation. For the full text, see congress.gov.