secure act


A bill has been passed by both houses of Congress that could impact the tax liability of any retirement funds that you pass on to your heirs. At Phelps LaClair in Chandler, Mesa, Phoenix and Scottsdale, the estate plans we write are designed to maximize asset protection for you and your heirs, provide excellent options for potential future medical needs, and minimize the tax exposure of your estate. How will this new legislation affect your estate?

What is SECURE?

The new bill, known as the SECURE Act, is retirement reform legislation. It has some beneficial provisions, and also some that could prove to be detrimental to your heirs.

The Good

It contains helpful and positive provisions for workers, such as:

  • Increasing access to retirement plans
  • Extending the age limit for contributing to IRA accounts
  • Increasing the age before which you must take minimum distributions

The Bad

Unfortunately, the SECURE Act also serves to eliminate “stretch” IRAs. For the non-spouse beneficiary of a retirement account, stretch IRAs allow the funds deposited in them to grow tax-free or tax-deferred, stretched out over the course of the beneficiary’s lifetime. Based on age and life expectancy, minimum distributions must be taken periodically. These distributions are subject to income taxation, but they are usually small.

The Ugly

Under the new legislation, the inherited retirement accounts must be drained within ten years of receiving them. That means that the distributions will be much larger and will incur larger tax liability within a shorter period of time. Essentially, you would be making the IRS a major beneficiary of your retirement accounts.

Who Benefits?

Obviously, this legislation will have a greater impact on higher income families since the tax burden will be larger. Even though all retirement accounts will be subject to this bill, the elimination of stretch IRAs will affect those who have more assets.

There are benefits to companies and employees, however. The bill allows more latitude for businesses to join together in multi-company retirement plans. This makes it easier for the companies to provide benefits for part-time employees as well as freelance or contract workers.


How this new legislation affects your estate depends on how you have your retirement funds invested. There are no “one-size-fits-all” estate plans, but we can always find the best solutions for your situation. For a more complete and thorough explanation of the SECURE Act, call us for a consultation. As always, your first consultation with Phelps LaClair is free. We will sit down with you to discuss your estate plans and goals, and we will find the best way forward for your situation. In our forty year multi-generation experience in estate planning, we have found that retirement can indeed be your golden years!



Images used under creative commons license (Commerical Use) 01/01/20  Photo by Sharon McCutcheon on Unsplash

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