After I wrote about the Setting Every Community Up for Retirement Enhancement (SECURE) Act, I received a slew of questions from readers. Below are some of the most common queries that I fielded about this complex act and what it means for your retirement planning.

Frank from Chicago wanted to clarification about how the new rules impact nonspouses who inherit IRAs. He provided this example: "Suppose my 68-year-old wife dies in 2020 and leaves an IRA account with $100,000 to her 40-year-old son by a previous marriage. How would this money be distributed and, more importantly, be taxed?"

Under the old — and new — rules, when anyone inherits a traditional IRA or any other retirement that has not yet been taxed, there will be a tax liability when the money is withdrawn from the account. The tax rate is determined by the beneficiary's tax rate at the time of the withdrawal. So, in Frank's example, when the son withdraws money from his mother's IRA, it would add to his taxable income for that calendar year and he would pay taxes at his tax rate.

The new rules add a twist to the scenario. Under the old rules, the son had the option of withdrawing the money over the course of his lifetime, thus stretching out the distributions and limiting the tax impact every year. Under the new rules, the son would be required to take his withdrawals out over the 10-year period after his mother's death.

Another Frank (this one from Virginia) asked about a 401(k) that he inherited from his brother, who died in 2019. His brother (64) had not yet begun making withdrawals from the account, but "the plan was to employ a 'stretch' strategy using IRS rules for lifetime withdrawals. Since my brother died in 2019, am I mandated to comply with the SECURE Act's new 10-year rule, or since he died in 2019, am I still permitted to use the 'stretch' option?"

The new rule reads that the effective date applies "to distributions with respect to employees who die after December 31, 2019," so in Frank's case, he can indeed stretch the distributions over the course of his life.

Joanne from New York asked about the specific exceptions to the new stretch IRA distribution rules. If you fall into one of these categories, the SECURE Act rules will not affect you:

  • The surviving spouse of the employee;
  • A child of the employee who has not reached the age of majority;
  • A disabled individual;
  • A chronically ill individual;
  • An individual who is not more than 10 years younger than the employee who died.

Another aspect of the SECURE Act that caused uncertainty concerned the ability to withdraw up to $10,000 tax free from 529 education savings accounts to pay off student loans. Margaret from Baltimore wrote: "My grandson is a senior in college and his parents took out a student loan for just over $10,000 for his semester that is starting right now. … Can I use 529 money to pay off his loan, which is now being paid for by the parents?"

The answer is yes, you should be able to do this, but importantly, before you start the process, you should contact the 529-plan provider, which in your case is T. Rowe Price, to make sure that you have proper documentation. For those grandparents who are worried about negatively impacting younger students' ability to qualify for future financial aid eligibility, you may want to wait to tap 529 plan funds until after your grandchild graduates to help pay down the student loans.

Jill Schlesinger, CFP, is a CBS News business analyst. She welcomes comments and questions at

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