Legal Blog

The Weekly Scenario: The SECURE ACT vs. The ‘Stretch’ IRA

Question: Did the SECURE ACT kill the ‘stretch’ IRA?  What if my client wishes to leave her IRA benefits to her disabled child (do we still lose the stretch)?  Finally, what the heck does SECURE actually stand for?

Answer: Under SECURE, the lifetime ‘stretch’ IRA is replaced with a 10-year rule for the vast majority of beneficiaries. Generally, this change applies to deaths after December 31, 2019. However, the effective date is extended for two years (for deaths after December 31, 2021) for governmental plans, including 403(b) and 457(b) plans and the Thrift Savings Plan (note that the new rules do not apply to defined benefit plans). The 10-year rule dictates that accounts must be emptied by December 31 of the tenth year following the year of death. There will be no annual RMDs.

Saying that the Setting Every Community Up for Retirement Enhancement (SECURE) Act ends the stretch IRA opportunity for many people is true, but not the entire story.  Until further guidance, regulations, or technical corrections are published, the answers to many SECURE Act questions are not completely known.

The SECURE Act addresses estate planning for IRA owners and qualified plan participants by putting beneficiaries into three categories:

  1. Eligible designated beneficiaries (EDBs)
  2. Non-designated beneficiaries (NonDBs)
  3. Designated beneficiaries (DBs)

For EDBs, the pre-SECURE Act rules largely remain in place, so life-expectancy-based schedules of required minimum distributions (RMDs) remain possible, permitting extended tax deferral. EDBs include surviving spouses, disabled and chronically ill (DCI) individuals, minor children of the participant, and beneficiaries less than 10 years younger than the account owner or plan participant.

The terms “disabled” and “chronically ill” in this context, in my opinion, are not entirely clear, but it appears these terms are defined by reference to other sections of the tax code.

A disabled heir is defined in the tax code as “an individual who is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or to be of long-continued and indefinite duration.  However, if the individual can engage in “any substantial gainful activity” even if very limited, that person will not qualify for this benefit.

A chronically ill heir is defined in the tax code as any individual who has been certified by a licensed health care practitioner as— (i) being unable to perform (without substantial assistance from another individual) at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity, (ii) having a level of disability similar to the level of disability described in clause (i), or (iii) requiring substantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment. Each of the following is an activity of daily living: (i)Eating. (ii) Toileting. (iii) Transferring. (iv) Bathing. (v) Dressing. (vi) Continence.”

The above definition suffers from the same overly restrictive terms as the definition of “disabled” above. Many intended beneficiaries are living with challenges that may limit or even prevent gainful employment, but they are not so severely incapacitated as to meet the requirements of chronically ill according to the above definition. Yet, these same people who need the protection of a trust, and who may desperately need the economic benefits from the plan assets to be bequeathed, will be forced to have the plan balance distributed in 10-years and lose the continued tax-deferred growth, etc.

As always, if you have any questions or would like to learn more, please contact Steve Shane at or 301.575.0313.



Steve Shane Casual | 301.575.0313

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts, and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.





Offit Kurman is one of the fastest-growing full-service law firms in the United States. With 14 offices in seven states, and the District of Columbia, and growing by 50% in two years through expansions in New York City and Charlotte, North Carolina, Offit Kurman is well-positioned to meet the legal needs of dynamic businesses and the individuals who own and operate them. For over 30 years, we’ve represented privately held companies and families of wealth throughout their business life cycles.

Whatever and wherever your industry, Offit Kurman is the better way to protect your business, preserve your family’s wealth, and resolve your most challenging legal conflicts. At Offit Kurman, we distinguish ourselves by the quality and breadth of our legal services—as well as our unique operational structure, which encourages a culture of collaboration and entrepreneurialism. The same approach that makes our firm attractive to legal practitioners also gives clients access to experienced counsel in every area of the law.

Find out why Offit Kurman is The Better Way to protect your business, your assets and your family by connecting via our Blog, Facebook, Twitter, Instagram, YouTube, and LinkedIn pages. You can also sign up to receive LawMatters, Offit Kurman’s monthly newsletter covering a diverse selection of legal and corporate thought leadership content.