SECURE Act 2.0, Inherited IRAs, and the Charitable Workaround
- J.T. Hardcastle
- Jun 29
- 5 min read
For decades, one of the best features of an inherited IRA was the "stretch." A child who inherited your retirement account could spread the withdrawals — and the taxes — across their own lifetime, letting the balance keep growing tax-deferred for years. Then the SECURE Act quietly took it away. For most people who inherit an IRA today, that lifetime stretch is gone, replaced by a ten-year deadline that can detonate a serious tax bill at the worst possible time.
The change caught a lot of families off guard, and many estate plans still assume rules that no longer exist. The encouraging news is that there's a well-established charitable workaround that can recreate much of what was lost — a lifetime income stream for your heirs — while also funding a gift you may have wanted to make anyway. Here's how the roadblock works, and how to drive around it.
What the SECURE Act changed
The 2019 SECURE Act eliminated the stretch IRA for most non-spouse beneficiaries and replaced it with a ten-year rule: the entire inherited account generally must be withdrawn within ten years of the original owner's death. A handful of beneficiaries are exempt — surviving spouses, minor children, the disabled or chronically ill, and those not more than ten years younger than the deceased — but for the typical adult child inheriting a parent's IRA, the ten-year clock now applies.
The problem is timing. Adult children often inherit during their own peak earning years, and dumping a large IRA on top of an already-high income over a compressed decade can push every withdrawal into the top tax brackets. A $1 million IRA that once stretched gently across thirty years now lands hard across ten, and a painful share goes to taxes. That's the tax bomb the new rule created.
The charitable workaround
This is where a charitable remainder trust earns its keep. Name a charitable remainder trust as the beneficiary of your IRA, and several good things happen at once. Because the trust is tax-exempt, the IRA can flow into it without an immediate tax hit. The trust then pays your heirs an income stream — for life or a term of years — effectively recreating the lifetime "stretch" the SECURE Act took away. And whatever remains when the income term ends goes to the charity you chose.
In other words, a properly structured trust lets you give twice: once to your heirs, in the form of steady income that isn't crushed into ten years, and once to charity, with the remainder. For a charitably inclined family with a large IRA and heirs who'd otherwise be hammered by the ten-year rule, it can be the rare fix that serves everyone but the IRS.
There's also a lifetime version of the workaround. If you're 70½ or older, qualified charitable distributions let you move up to roughly $108,000 a year straight from your IRA to charity, satisfying your required minimum distribution and shrinking the account — and the future tax bomb — before it's ever inherited. SECURE 2.0 even added a one-time option to use a QCD of up to $50,000 to fund a charitable remainder trust or gift annuity.
Whether a charitable remainder trust beats simply letting heirs absorb the ten-year hit depends on your IRA's size, your heirs' tax brackets, and your charitable intent. A Clarity Call is the place to run it — 30 minutes with a Partner, no pitch.
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When the workaround fits — and when it doesn't
The trust strategy fits best when three things are true: you're charitably inclined, your IRA is large enough that the ten-year rule would create a real tax problem, and your heirs would otherwise be pushed into high brackets by the forced withdrawals. For that family, the testamentary charitable remainder trust can deliver more lifetime value to the heirs and fund a meaningful gift — genuinely better on both ends.
It's not for everyone, and honesty requires naming the trade-off. With a charitable remainder trust, the charity receives whatever's left at the end; your heirs get the income stream, not the full principal as an outright inheritance. A family with no charitable intent, or one whose heirs need the entire balance in hand, may simply prefer to take the ten-year hit. As with most of these tools, the right answer depends on running your actual numbers, not a rule of thumb.
What's certain is that ignoring the change is the worst option. Plenty of estate plans were written when the stretch still existed and quietly assume rules that died years ago. If yours hasn't been reviewed since the SECURE Act, the ten-year rule may be waiting to surprise the people you love most. A short conversation now — about beneficiary designations, charitable trusts, and lifetime QCDs — can defuse a bomb your heirs don't even know is ticking. The stretch may be gone, but with the right structure, its best benefit doesn't have to be.
First, just check your beneficiary forms
Before any trust or advanced strategy, there's a five-minute task almost everyone has neglected: actually reading your current IRA beneficiary designations. Many were filled out years or decades ago, often before the SECURE Act existed, and they quietly control where some of your largest assets will go — overriding whatever your will says. A surprising number name a long-since-changed beneficiary, a now-adult minor, or an estate, each of which can trigger worse tax outcomes than necessary. The single highest-value thing you can do this week is pull up those forms and confirm they still reflect your intentions under today's rules.
From there, the strategy follows your situation. If you're charitably inclined and worried about the ten-year tax bomb, explore naming a charity or a charitable remainder trust as beneficiary. If you're over 70½, start using qualified charitable distributions now to shrink the account before it's ever inherited. And if your heirs simply need the money and you have no charitable intent, at least make sure they understand the ten-year rule so they can plan their withdrawals across low-income years rather than taking it all at once. The SECURE Act changed the rules quietly, and the danger is that your plan still assumes the old ones. A short review — beneficiary forms first, strategy second — can turn a looming tax problem into a handled one. Don't let a form you filled out fifteen years ago decide how your retirement savings get taxed for the people you love.
Inherited-IRA planning depends on your account, your heirs, and current law, and requires coordination with your advisors. The conversations that move people from "interesting idea" to "actual decision" happen one-on-one — your numbers, your values, an honest read.
Book a Clarity Call — 30 minutes with a Partner. No pitch. No homework.
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