The Setting Every Community Up for Retirement Enhancement (SECURE) Act was signed into law in December 2019, representing the most significant overhaul of U.S. retirement legislation in over a decade. SECURE Act 2.0 followed in December 2022, extending and expanding the original reforms. Together they changed RMD ages, eliminated the "stretch IRA," restructured inherited account rules, and expanded access to retirement savings.
For the Series 7, these laws are heavily tested because they changed rules that were stable for decades. Know the before-and-after for each major provision.
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Required Minimum Distributions are mandatory annual withdrawals from Traditional IRAs and most qualified retirement accounts. The SECURE Act and SECURE Act 2.0 raised the starting age in stages:
| Law | RMD Starting Age | Effective | |---|---|---| | Pre-SECURE Act | Age 70½ | Through 2019 | | SECURE Act (2019) | Age 72 | 2020–2022 | | SECURE Act 2.0 (2022) | Age 73 | 2023–2032 | | SECURE Act 2.0 (2022) | Age 75 | 2033 and after |
Exam tip: The progression is 70½ → 72 → 73 → 75. Know all four stages — questions may test the current rule (73) or ask which law made which change.
The first RMD must be taken by April 1 of the year following the year the account owner reaches the applicable RMD age. All subsequent RMDs must be taken by December 31 each year.
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Under prior law, failing to take an RMD triggered an excise tax of 50% of the amount that should have been distributed — one of the harshest penalties in the tax code.
SECURE Act 2.0 reduced this penalty:
This makes it less catastrophic to accidentally miss an RMD and encourages self-correction rather than expensive professional remediation.
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Before the SECURE Act, non-spouse beneficiaries who inherited an IRA could stretch distributions over their own life expectancy — sometimes 40–50 years for a young beneficiary. This allowed the account to keep compounding tax-deferred for decades, an enormously powerful wealth-transfer tool.
The SECURE Act eliminated the stretch IRA for most beneficiaries effective January 1, 2020, replacing it with the 10-year rule.
The 10-year rule: Non-spouse beneficiaries who inherit an IRA (or Roth IRA) from an owner who died on or after January 1, 2020, must fully distribute the entire account within 10 years of the owner's death.
Annual distribution requirements during the 10-year period depend on whether the original owner had already begun RMDs:
The 10-year rule applies to both Traditional and Roth inherited IRAs. Roth IRA distributions remain tax-free, but the 10-year liquidation requirement still applies.
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Certain beneficiaries — called Eligible Designated Beneficiaries (EDBs) — are exempt from the 10-year rule and may still use life-expectancy stretch distributions:
Every other beneficiary — adult children, grandchildren, non-spousal partners more than 10 years younger, most trusts — is subject to the 10-year rule.
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Before SECURE Act 2.0, Roth 401(k) accounts were subject to lifetime RMDs — unlike Roth IRAs, which have no RMDs during the owner's lifetime. This inconsistency often prompted advisors to recommend rolling Roth 401(k) balances into Roth IRAs before RMD age to avoid forced distributions.
SECURE Act 2.0 fix: Beginning in 2024, Roth 401(k) accounts are no longer subject to Required Minimum Distributions during the owner's lifetime. This aligns Roth 401(k) treatment with Roth IRA treatment and removes the need for a pre-RMD rollover.
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SECURE Act 2.0 significantly expanded catch-up contribution opportunities for older workers:
Ages 60–63 "super catch-up" (effective 2025): Employees aged 60–63 may contribute an additional amount to their 401(k) or 403(b) equal to the greater of $10,000 or 150% of the regular catch-up amount. This window closes at age 64 — at 64 the regular catch-up amount resumes.
IRA catch-up indexed to inflation: The $1,000 IRA catch-up for age 50+ will now be adjusted for inflation in future years, rather than remaining a fixed $1,000 indefinitely.
SIMPLE IRA catch-up increases: SIMPLE IRA catch-up limits for ages 60–63 also received a boost under SECURE Act 2.0.
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SECURE Act 2.0 requires that new 401(k) and 403(b) plans established after December 29, 2022, must automatically enroll eligible employees at a contribution rate of at least 3% (and no more than 10%), with automatic annual escalation of 1% per year up to at least 10% (and no more than 15%).
This mandate takes effect for plan years beginning after December 31, 2024. Existing plans are grandfathered. Small businesses with 10 or fewer employees and businesses in operation for fewer than 3 years are exempt.
Research consistently shows that automatic enrollment dramatically increases retirement plan participation rates, particularly among younger and lower-income workers who might not otherwise opt in.
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529-to-Roth IRA rollovers (effective 2024): Unused 529 college savings plan funds can be rolled into a Roth IRA for the beneficiary, subject to: a lifetime maximum of $35,000; annual Roth IRA contribution limits apply to each year's rollover; the 529 must have been open for at least 15 years; and the beneficiary must have earned income.
Student loan matching: Employers may treat employee student loan payments as elective deferrals for purposes of calculating the employer match — helping employees who cannot save for retirement while paying down student debt still accrue employer matching credits.
Emergency savings accounts: Plans may offer linked emergency savings accounts for non-highly compensated employees, capped at $2,500, with the first four withdrawals per year penalty-free.
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Quiz Questions:
Q1. Under current law (SECURE Act 2.0), at what age must a Traditional IRA owner who turns 73 in 2025 begin taking Required Minimum Distributions?
A) Age 70½ B) Age 72 C) Age 73 D) Age 75
Answer: C — SECURE Act 2.0 raised the RMD starting age to 73 for individuals reaching that age in 2023 or later. The age will rise again to 75 starting in 2033. Age 70½ applied before the SECURE Act (2019); age 72 applied from 2020 through 2022 under the original SECURE Act.
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Q2. A 42-year-old non-spouse beneficiary inherits a Traditional IRA from her aunt who died in 2025. Her aunt had already begun taking RMDs. Under current law, which statement BEST describes the distribution requirements?
A) She may stretch distributions over her own 42-year life expectancy B) She must take annual distributions in years 1–9 and fully distribute the account by the end of year 10 C) She must distribute the entire account within 5 years of her aunt's death D) She has no distribution requirement until she reaches age 73
Answer: B — As a non-spouse adult beneficiary (not an EDB), she is subject to the 10-year rule. Because her aunt had already begun RMDs, she must also take annual distributions in years 1–9, with the full remaining balance distributed by the end of year 10. The old stretch IRA (A) was eliminated by the SECURE Act for most beneficiaries. The 5-year rule (C) was the pre-SECURE Act rule for certain accounts; the 10-year rule now applies.
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Q3. Which of the following beneficiaries who inherits a Traditional IRA from an account owner who died in 2025 is EXEMPT from the 10-year distribution rule?
A) An adult daughter, age 38 B) A grandson, age 25, in graduate school C) A surviving spouse D) A domestic partner, age 48, who is 15 years younger than the deceased
Answer: C — The surviving spouse is an Eligible Designated Beneficiary and may roll the inherited IRA into their own IRA or stretch distributions over their own life expectancy. The adult daughter (A) is a non-EDB subject to the 10-year rule. The adult grandson (B) is over the age of majority — he is not an EDB. The domestic partner (D) is more than 10 years younger than the decedent, so they do not qualify for the "not more than 10 years younger" EDB exception.
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Q4. What change did SECURE Act 2.0 make to Roth 401(k) accounts, effective 2024?
A) Roth 401(k) accounts became subject to the same income limits as Roth IRAs B) Roth 401(k) accounts no longer require Required Minimum Distributions during the owner's lifetime C) Roth 401(k) contributions became tax-deductible for high-income earners D) Roth 401(k) balances must be transferred to a Roth IRA no later than age 73
Answer: B — SECURE Act 2.0 eliminated lifetime RMDs for Roth 401(k) accounts beginning in 2024, aligning them with Roth IRA treatment. Previously, Roth 401(k) owners were required to take RMDs (or roll to a Roth IRA to avoid them). Roth 401(k) contributions remain after-tax with no deduction (C is wrong), there is no mandatory rollover (D is wrong), and Roth 401(k)s have no income limits (A is wrong).
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Q5. Under SECURE Act 2.0, an account owner misses an RMD and corrects the mistake within the IRS correction window. What is the excise tax penalty on the shortfall?
A) 50% — the penalty was not changed by SECURE Act 2.0 B) 25%, with no further reduction available C) 10%, because the failure was corrected within the correction window D) 0% — SECURE Act 2.0 eliminated the missed-RMD penalty entirely
Answer: C — SECURE Act 2.0 reduced the standard missed-RMD penalty from 50% to 25%. If the failure is corrected within the correction window (generally within 2 years), the penalty is further reduced to 10%. The penalty was not eliminated (D) — it was made more proportional and self-correction-friendly.