SECURE-ing retirement plans for the future: A primer on proposed regulations to the SECURE Act


by Christopher J. Caldwell and Robert M. Huff   |   Michigan Bar Journal


Note: Most of the regulations addressed in this article are proposed regulations that have not yet been finalized and promulgated. These proposed regulations, which are cited as such in the article endnotes, can also be found at the Federal Register at 87 FR 10504.

On Dec. 20, 2019, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which took effect on Jan. 1, 2020.1 A little more than two years later, the Internal Revenue Service offered guidance to taxpayers and practitioners by promulgating proposed regulations that interpret the SECURE Act.

Almost exactly three years to the day after the SECURE Act passed, the SECURE 2.0 Act became law on Dec. 29, 2022.2 However, regulations for SECURE 2.0 are likely a long way off and beyond the scope of this piece save for the occasional parenthetical. Instead, this article focuses on the proposed regulations that emerged from the first SECURE Act,3 shedding light on the areas of estate planning with retirement assets that are most impacted by the law.


Practitioners need to understand one foundational concept before delving into the more complex rules of the SECURE Act which took effect in 2020. There are now three classes of beneficiaries — designated beneficiaries (DBs),4 eligible designated beneficiaries (EDBs),5 and the absence of designated beneficiaries (NoDBs). The different beneficiaries yield different payout timelines and required minimum distributions (RMDs) discussed below.

DBs are exactly what they sound like: individual (human) beneficiaries designated by the account holder to receive qualified assets from a decedent,6 though certain trusts also qualify as DBs. EDBs are a subset of DBs comprised of the following: a surviving spouse, a minor child of the account holder (under age 21),7 a disabled or chronically ill individual, and an individual who is not more than 10 years younger than the account holder (or is older than the account holder.)8 If there are multiple DBs and at least one of the beneficiaries is not an EDB, the account holder is treated as having DBs but no EDBs.9

What about estates and trusts? The answers differ greatly. Estates are not DBs10 so, accordingly, any plan which names the account holder’s estate as the beneficiary is treated the same as if there was no DB at all. Trusts, however, require greater investigation. If a trust does not qualify as a see-through trust, the account is NoDB.11 Proposed regulations classify see-through trusts as either conduit trusts, which require all account distributions to be paid directly to or for specified beneficiaries,12 or accumulation trusts, which are all other see-through trusts not categorized as see-through trusts.13 In determining whether a trust qualifies as a DB or EDB, we must examine the status of trust beneficiaries. Any primary, first-tier beneficiary whose interest is not contingent on the death of another beneficiary is counted for all trusts.14 For conduit trusts, the examination ends here.15

For accumulation trusts, the path is more daunting. We determine the status of a beneficiary who may take solely due to the death of another beneficiary as a secondary beneficiary.16 For many accumulation trusts, this ends the examination. However, where a secondary beneficiary is deemed to have or actually predeceased the account holder, generally, we must examine the tertiary beneficiaries — those who can take solely due to the death of a secondary beneficiary. Exceptions to counting tertiary beneficiaries include situations where the primary beneficiaries are the account holder’s minor children and where all account proceeds must be distributed by the time a beneficiary reaches age 31.17


The most widely publicized change resulting from the SECURE Act is how long beneficiaries may keep inherited retirement assets in inherited accounts, deferring the payment of income tax on distributions. The calculation of the end date, the outer limit year (OLY), contains the most profound tax-planning limitations under the SECURE Act.

The OLY calculation depends on the type of beneficiary and whether the account holder had reached the required beginning date (RBD) prior to death. Generally, the RBD is now the later of the year when the account holder attains age 72 or retires.18 (One major change from SECURE 2.0: this age is now 73 as of Jan. 1, 2023, and will increase to 75 in 2033.)

NoDBs present the most straightforward rules. If the account holder had a NoDB and died prior to the RBD, all account assets must be distributed outright within five years.19 If the account holder had NoDB and died following her RBD, the OLY is determined based on the deceased account holder’s life expectancy.20 That’s not a typo — the deceased individual’s hypothetical life expectancy determines the OLY. This is the aptly named the “at least as rapidly” rule.

DB rules are also rather clear. If the account holder died prior to the RBD, the OLY is in year 10.21 If, however, the account holder died following the RBD, the OLY is determined by the longer of the deceased account holder’s life expectancy or the DB’s own life expectancy.22 If that period is longer than 10 years, however, the OLY is capped at 10 years.23 In the event that there are multiple DBs, the oldest DB’s life is used as the measuring life.24 There are also certain complications associated with multibeneficiary trusts which we’ll discuss in greater detail below.

The regulations for EDBs are more complicated than those above but still offer the most desirable OLY extensions. If an account holder dies before her RBD and her surviving spouse is the sole beneficiary, the surviving spouse may elect to delay the RBD until what would have been the account holder’s own RBD.25 In any event, the OLY for a qualified asset in the hands of a surviving spouse is year 10 following the surviving spouse’s own death unless otherwise limited to year five if the surviving spouse dies leaving a NoDB account.26

If the EDB is the account holder’s minor child, the OLY is the year in which the minor child reaches age 31.27 This is true regardless of whether the account holder died before or after her RBD.

For EDBs who are not more than 10 years younger than the account holder or are chronically ill or disabled individuals, the OLY is the same as that of a surviving spouse: year 10 following the EDB’s own death.28

Finally, there are two broad rules that apply among most EDBs. First, in the case of EDBs other than a minor, the EDB may elect to make the OLY year 10.29 Second, upon the death of an EDB, the OLY for the subsequent beneficiary is year 10 even if the subsequent beneficiary is otherwise an EDB.30


After determining the beneficiary’s OLY, we must determine whether required minimum distributions (RMDs) must be taken by the beneficiary. As with the OLYs, the character of the beneficiary dictates the RMD determination. As before, the account holder’s surviving spouse can annually recalculate RMDs based on their own life expectancy.31 However, the deceased account holder’s “ghost” life expectancy — calculated as if the account holder hadn’t actually died — could be longer than the surviving spouse’s life expectancy. In this situation, if the account holder dies after her RBD and the account holder’s ghost life expectancy is longer than that of the surviving spouse, the surviving spouse may elect to utilize the account holder’s ghost life expectancy in calculating the RMD.32

Unlike with a surviving spouse, there is only one RMD rule for a minor child EDB: the minor child must begin taking RMDs upon inheriting the account with the calculated amount based on the minor child’s own life expectancy.33

RMDs for disabled or chronically ill individuals follow the same rules as those for EDBs not more than 10 years younger than the account holder. For these EDBs, RMDs start immediately and are based on the longer of the beneficiary’s own life expectancy or the decedent’s life expectancy.34 Once again, this is true regardless of whether the account holder reached her RBD.

For beneficiaries other than EDBs, the RMD rules are similar though not quite identical. If the account holder died prior to her RBD, no RMDs are required.35 If the account holder instead died after her RBD, RMDs continue based on the account holder’s life expectancy though a DB may utilize their own life expectancy if longer than the account holder’s life expectancy.36

There was some confusion over whether decedents dying in 2020 and 2021 would give rise to RMDs in those years for certain beneficiaries in their inherited accounts. The IRS cleared up this confusion when it issued Notice 2022-53, which effectively provided a free pass for RMDs not made in 2021 and 2022.


While complicated, the regulations detailed above do make sense. The regulations that apply to trusts, unfortunately, are not as friendly. We’ll address a few of these provisions.

First, the regulations provide three scenarios regarding powers of appointment (POA). All three look to the status of the POA as of Sept. 30 of the year following the account holder’s death even though, in most situations, the POA itself won’t be effectuated until the power holder dies. If the power holder exercises the POA, then only appointees of the POA are countable for OLY and RMD purposes.37 If the power holder restricts the power, only the remaining potential appointees of the POA are countable.38 If the power holder takes no action with the POA by Sept. 30, then the POA is deemed unexercised and the trust beneficiaries are as provided for in the trust.39

But wait! There’s a fourth scenario. If the power holder exercises the POA after Sept. 30, the appointees are now countable beneficiaries and RMDs are recalculated.40 Your authors hope the final regulations offer further guidance on POAs.

The proposed regulations also address three trust modification scenarios. First, if a beneficiary is removed by the following Sept. 30, that beneficiary is not counted.41 Second, if a beneficiary is added by the following Sept. 30, that beneficiary is counted.42 Third, if a beneficiary is added after the following Sept. 30, the new beneficiary is counted and RMDs must be recalculated in an outcome similar to the POA situations above.43

Multibeneficiary trusts (MBTs) are addressed separately from the general rules for trusts discussed above. If the MBT splits into separate portions on the account holder’s death, each subtrust is evaluated on its own pursuant to the aforementioned rules. If, however, the MBT remains a single trust where the sole beneficiaries are disabled or chronically ill individuals during their lifetimes, the OLY and RMD for the MBT is determined with reference to the oldest EDB.44

Despite the confusing provisions, naming a conduit trust as a beneficiary has become much more attractive under the SECURE Act. Conversely, any beneficiary designation naming an accumulation trust must be examined in close detail to ensure that a desired tax deferral opportunity isn’t lost as the result of a countable secondary or tertiary beneficiary.


If you find yourself struggling to digest this dense material, we get it. Although we cannot cover all possible scenarios, consider the following common situations and potential planning traps:

Surviving spouse is sole beneficiary

The most common situation has nearly the same outcome as it did in 2019. A surviving spouse can delay RMDs if the account holder dies prior to her RBD and then takes modest RMDs over the surviving spouse’s own lifetime. The OLY for the surviving spouse’s own beneficiaries is limited by the SECURE Act, but that’s not a massive change. This plays out the same way whether the surviving spouse’s portion passes outright or via a conduit trust.

But wait! What if the surviving spouse’s share is held in an accumulation trust? If the secondary beneficiary isn’t an EDB — say, the account holder’s adult children — then the DB rules apply to the surviving spouse, stripping the surviving spouse of EDB status.

Adult children as sole beneficiaries

If the account holder died before her RBD, no RMDs are required but the OLY is year 10 after the account holder’s death. RMDs are required if the account holder died after her RBD.

Minor children as sole beneficiaries

Very small RMDs are required, then all assets must be distributed when the child attains age 31. Note that, while an adult child receives an earlier OLY than a minor child, an adult child’s ability to avoid RMDs until the entire account is distributed at the end of year 10 may be preferable to the minor child’s small RMDs and delayed OLY.

Some adult and some minor children as beneficiaries

As noted above, a plan that designates multiple beneficiaries, but only some of which are EDBs, will be treated as having no EDBs. For example, if the account holder names her minor children and adult children, her minor children will not qualify as EDBs, accelerating the payout of their inherited accounts and thus accelerating taxes due to the inclusion of the adult children as beneficiaries.

Disabled or chronically ill individuals as beneficiaries

The SECURE Act provides very favorable treatment to disabled or chronically ill individuals when they are primary beneficiaries, offering RMDs based on their own life expectancy and an OLY that extends to year 10 following the beneficiary’s death. This should be protected whenever possible. That said, the proposed regulations leave many open questions regarding chronically ill and disabled beneficiaries which have been a cause for concern among practitioners; we expect the final regulations to provide more detail in this regard.

An elderly account holder with a disabled or chronically ill beneficiary may want to consider avoiding naming her surviving spouse as the EDB. Recall that upon the death of an EDB, the OLY for a subsequent beneficiary is not longer than year 10. Thus, a disabled or chronically ill individual who could otherwise conceivably enjoy a multidecade stretch will be forced to terminate a plan at the end of year 10 following the surviving spouse’s death.


We recognize that the above is a slog. However, we hope a distilled look at this area of law inspires you to venture confidently in advising your clients. By understanding the above, you can help secure a bright future for them and their beneficiaries.



1. Godbout, SECURE Act is Signed into Law, ASPPA (December 20, 2019) [https://perma. cc/6DV8-X2W7]. All websites cited in this article were accessed March 21, 2023.

2. Godbout, It’s Official: SECURE 2.0 Enacted Into Law, ASPPA (December 30, 2022) [https://perma.cc/A445-44QH].

3. The proposed regulations analyzed in this article can be found at Proposed Reg­ulations Related to Required Minimum Distributions, 87 Fed Reg 10,504 (February 24, 2022), to be codified at 26 CFR Parts 1 and 54, available at [https://perma. cc/U8HZ-7QXZ].

4. 26 USC 401(a)(9)(E)(i).

5. 26 USC 401(a)(9)(E)(ii).

6. 26 USC 401(a)(9)(E)(i) and Proposed Reg § 1.401(a)(9)-4(a)(1).

7. Proposed Reg § 1.401(a)(9)-4(e)(3).

8. 26 USC 401(a)(9)(E)(ii).

9. Proposed Reg § 1.401(a)(9)-4(e)(2)(i).

10. Proposed Reg § 1.401(a)(9)-4(a)(4).

11. Proposed Reg § 1.401(a)(9)-4(b).

12. Proposed Reg § 1.401(a)(9)-4(f)(1)(ii)(A).

13. Proposed Reg § 1.401(a)(9)-4(f)(1)(ii)(B).

14. Proposed Reg § 1.401(a)(9)-4(f)(3)(i)(A).

15. Proposed Reg § 1.401(a)(9)-4(f)(3).

16. Proposed Reg § 1.401(a)(9)-4(f)(3)(i)(B).

17. Proposed Reg § 1.401(a)(9)-4(f)(3)(ii)(B).

18. 26 USC 401(a)(9)(C)(i).

19. Proposed Reg § 1.401(a)(9)-3(c)(2) and Proposed Reg § 1.401(a)(9)-3(c)(5)(B).

20. Proposed Reg § 1.401(a)(9)-5(d)(1)(iii).

21. Proposed Reg § 1.401(a)(9)-3(c)(3) and Proposed Reg § 1.401(a)(9)-3(c)(5)(B).

22. Proposed Reg § 1.401(a)(9)-5(d)(1)(ii).

23. Proposed Reg § 1.401(a)(9)-5(e)(2).

24. Proposed Reg § 1.401(a)(9)-5(f)(1)(i).

25. Proposed Reg § 1.401(a)(9)-3(d).

26. Proposed Reg § 1.401(a)(9)-3(e).

27. Proposed Reg § 1.401(a)(9)-5(e)(4).

28. Proposed Reg § 1.401(a)(9)-3(c)(4).

29. Proposed Reg § 1.401(a)(9)-5(d)(2).

30. Proposed Reg § 1.401(a)(9)-3(c)(3).

31. Proposed Reg § 1.401(a)(9)-5(d)(3)(iii).

32. Proposed Reg § 1.401(a)(9)-5(d)(1).

33. Proposed Reg § 1.401(a)(9)-5(e)(4).

34. Proposed Reg § 1.401(a)(9)-5(d)(1).

35. Proposed Reg § 1.401(a)(9)-3(c)(2), (3) and Proposed Reg § 1.401(a)(9)-3(c)(5) (A), (B).

36. Proposed Reg § 1.401(a)(9)-5(d)(1)(ii).

37. Proposed Reg § 1.401(a)(9)-4(f)(5)(i).

38. Proposed Reg § 1.401(a)(9)-4(f)(5)(ii)(A).

39. Proposed Reg § 1.401(a)(9)-4(f)(5)(ii)(A).

40. Proposed Reg § 1.401(a)(9)-4(f)(5)(ii)(B).

41. Proposed Reg § 1.401(a)(9)-4(f)(5)(iii)(B).

42. Proposed Reg § 1.401(a)(9)-4(f)(5)(iii)(C).

43. Proposed Reg § 1.401(a)(9)-4(f)(5)(iv).

44. Proposed Reg § 1.401(a)(9)-5(f)(1)(ii).