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  • Writer's pictureMichael Urch

How the Secure Act Tax Law Change of 2020 Will Hurt Your Kids

A lot of things were different before 2020 came along.


I’m sure you can think of endless examples. But did you know that retirement account inheritance rules have changed?


It used to be that you could keep an Inherited IRA for life. 


Yes, there was an annual required distribution, i.e. you had to take some money out every year. 


But, after the Secure Act in 2020, in most cases, an inherited IRA must be depleted

within ten years. In other words, you have to take out all the money within 10 years.


What’s the big deal? Why does this matter?


Taxes. Taxes are a big deal. This change creates a tax liability. 


An inherited IRA is inherited money that has yet to be taxed


When you withdraw money from an inherited IRA, every dollar is taxed as ordinary income.


This tax is referred to as income tax concerning the descendent.


In the old days (that’s right, I refer to pre-2020 as the old days), your kids could spread their tax liability throughout their entire lifetime. 


Now, they’ll have to pay it all within ten years. The bottom line is that they will get less, and the IRS will get more.



An inherited IRA is inherited money that has yet to be taxed. 


However, there may be ways to structure your estate plan to minimize the tax liability. It’s critical that you work with a financial advisor as you optimize your estate plan.


At 360, our LifeWealth Process helps us ensure everything is set up for a tax-efficient transfer of wealth.


If you’d like to use me as a sounding board, I’ll set aside 15 minutes. 


Click below to schedule a time.









Michael Urch

About the Author

Michael Urch

As a CERTIFIED FINANCIAL PLANNER,™ Michael advises his clients on insurance, investment, retirement income, tax, and estate planning. He prides himself on being a professional advisor who puts planning before products. Michael likes to start with each client’s “why.” By understanding what’s truly important to them, the “what” of investment and planning strategies can be custom-designed to support their long-term ambitions.









This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


This is a hypothetical situation based on real-life examples. Names and circumstances have been changed. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your advisor prior to investing.



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