1. The Required Minimum Distribution (RMD) Age Increased
Previously, individuals were required to begin taking Required Minimum Distributions (RMDs) from traditional IRAs and certain retirement accounts at age 70½.
The SECURE Act increased the RMD age to 72, and SECURE 2.0 later increased it again to age 73 for individuals born between 1951 and 1959. For individuals born in 1960 or later, the RMD age will increase to 75 beginning in 2033.
This change allows retirement accounts to continue growing tax-deferred for a longer period before withdrawals are required.
2. Traditional IRA Contributions Are Now Allowed After Age 70½
Prior to the SECURE Act, individuals age 70½ or older could not contribute to a traditional IRA, even if they had earned income.
The SECURE Act eliminated that age restriction. Now, individuals of any age may contribute to a traditional IRA as long as they have earned income and otherwise qualify under IRA contribution rules. This allows people who continue working later in life to keep saving for retirement and benefit from additional tax-deferred growth.
3. Changes to the “Stretch IRA” for Non-Spouse Beneficiaries
The SECURE Act significantly changed the rules for inherited IRAs.
Prior to the law, many non-spouse beneficiaries such as adult children could “stretch” distributions from an inherited IRA over their life expectancy. This allowed the account to grow tax-deferred for many years while spreading out the income taxes.
Under the SECURE Act, most non-spouse beneficiaries must now withdraw the entire inherited IRA within 10 years of the original account owner’s death. In many cases, distributions may also be required during that 10-year period depending on whether the original account owner had already begun taking RMDs.
These changes can create larger tax consequences for heirs, particularly when substantial IRA balances are inherited during peak earning years.