What You Need to Know Before the SECURE Act Takes Effect Jan. 1

The “Stretch” IRA is out, the 10-year rule is in

The SECURE (Setting Every Community Up for Retirement Enhancement) Act goes into effect Jan. 1, 2020. Lawmakers hope the new rules will do two things: encourage more business owners to offer retirement plans and encourage workers to save more for retirement. The big impact for pre-retirees and retirees is in changes to the RMD (Required Minimum Distribution) age and IRA (Individual Retirement Account) contributions.

“The new law opens up options in some areas and puts limits on others,” said Merkle Retirement Planning co-founder Loren Merkle CFP®. “I really like what the IRA changes and pushing back the RMD age does for those working hard to save for retirement. The change that may have many people re-evaluating their current retirement or legacy plan is how IRAs are passed on to someone other than a spouse.”

Under the SECURE Act the RMD age is pushed back from age 70.5 to age 72. If you are under age 70.5 on Dec. 31, 2019 your RMD age is 72. If you are age 70.5 or older on Dec. 31, 2019 then your RMD age is still age 70.5.

The SECURE Act also allows workers to contribute to traditional IRAs after age 70.5. Previously, even if you had earned income you couldn’t contribute to an IRA after you hit age 70.5.

When you pass on your IRA or 401k to someone other than your spouse they no longer have the ability to stretch out the distributions over their lifetime, often referred to as a Stretch IRA or Stretch Provision. Under the SECURE Act the nonspousal beneficiary will have to take the distribution within 10-years.

“This change could increase the tax burden on your beneficiaries significantly,” said Merkle.  “This will nullify a lot of current planning with beneficiaries and trusts. This change will require many to look at some advanced planning techniques that could be beneficial to protecting their assets.”

Merkle said there are many exceptions to these new rules and that each individual case, like each retirement plan, is different. He encourages people to have discussions with your retirement planner, estate planning attorney and/or CPA.

“The SECURE Act makes planning for retirement more important than ever,” said Merkle. “There are opportunities to maximize retirement contributions while making sure your assets are transferred to charities and loved ones in the most efficient way possible.”

Merkle also says the SECURE Act offers a route for small employers to band together to offer 401(K) or employee sponsored retirement plans. The legislation is designed to decrease the cost of offering these plans by using cost sharing.


Merkle Retirement Planning

Merkle Retirement Planning is a comprehensive retirement planning firm working with pre-retirees and retirees to guide them to and through retirement. Customized retirement plans are created using the principles of the Merkle Retirement Method (Income Planning, Investment Planning, Tax Planning, Health Care and Long-term Care Planning and Legacy Planning). Merkle Retirement Planning holds several free educational classes. Go to for more information.


About Loren Merkle
Loren Merkle CFP® is the co-founder of Merkle Retirement Planning in Grimes, Iowa. He has more than 20 year of experience helping individuals and families retire. His passion is retirement education. Education classes, the Retiring Today podcast, the TV show of the same name and the Merkle Retirement Planning You Tube channel are some of the way he and the Merkle Retirement Planning team educate and empower pre-retirees and retirees.

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