The SECURE Act 2.0 Could Shrink Your Family’s Inheritance — Here’s What Hawaiʻi Families Need to Know
- Keoni
- 2 days ago
- 5 min read
If you have an IRA, 401(k), or other retirement savings, recent changes in federal law could significantly affect how — and how quickly — your loved ones receive those assets after your death.
The SECURE Act 2.0, passed in late 2022, introduced some of the most sweeping retirement planning changes in decades. While many people assume these updates only matter during retirement, the reality is far more personal: the law directly impacts your beneficiaries, including how much they must withdraw, when they must withdraw it, and how much of your hard-earned savings could be lost to taxes.
For families here in Honolulu and across Hawaiʻi, where retirement accounts often represent a major portion of personal wealth, failing to update your estate plan could mean unnecessary stress, confusion, and financial loss for the people you care about most.
Let’s break down what changed — and why it matters.
Why the SECURE Act 2.0 Is So Important for Your Family
Retirement accounts don’t follow the same rules as your home, bank accounts, or personal belongings. They come with strict tax laws and withdrawal requirements that apply after your death, not just during your lifetime.
When Congress changes those rules, the ripple effect lands squarely on your beneficiaries.
The SECURE Act 2.0 expanded retirement savings opportunities for account owners — but it also accelerated withdrawals and tax exposure for many heirs. Estate plans drafted even a few years ago may now be operating under rules that no longer exist.
And that’s where families often get caught off guard.
Key Changes Every Hawaiʻi Family Should Understand
1. Required Minimum Distributions (RMDs Start Later)
The age at which you must begin taking Required Minimum Distributions from traditional IRAs and 401(k)s has increased:
Age 73 for those born between 1951 and 1959
Age 75 for those born in 1960 or later
This allows your retirement funds more time to grow — which sounds great. But there’s a tradeoff.
Why this matters: Larger account balances later in life can result in larger taxable withdrawals for your beneficiaries, unless your estate plan includes strategies to manage that tax burden.
2. The 10-Year Rule Still Applies for Most Beneficiaries
Most non-spouse beneficiaries must still fully withdraw inherited retirement accounts within 10 years of the account owner’s death.
This means your child, grandchild, or other loved one may be forced to take large withdrawals over a short time frame — often during their peak earning years.
Why this matters: Compressed withdrawals can push beneficiaries into higher tax brackets, reducing what you intended to leave them — sometimes dramatically.
3. Trusts as Beneficiaries: A Hidden Risk
Many Hawaiʻi families name a trust as the beneficiary of their retirement accounts for control or protection. But under the SECURE Act and SECURE Act 2.0, outdated trust language can backfire.
Older trusts may now:
Trigger immediate taxation
Restrict access to funds when beneficiaries need them
Force lump-sum distributions that contradict your intent
A Common (and Costly) Example:
Before 2020, many trusts were written to distribute only the “required minimum amount” each year. Under today’s rules, there may be no required annual distribution at all — until year ten.
The result? Your trustee may be unable to distribute funds for years, followed by a massive, fully taxable withdrawal in year ten — wiping out a large portion of the account in taxes.
Why this matters: Instead of creating protection, an outdated trust can unintentionally create a tax nightmare.
How These Changes Can Impact the People You Love
While the SECURE Act 2.0 offers benefits during your lifetime, it often shifts complexity and tax exposure to your loved ones.
Without updated planning, families may face:
Delays accessing retirement funds
Avoidable tax bills
Confusion during an already emotional time
Legal and administrative hurdles
In Hawaiʻi, where families value clarity, harmony, and mālama ʻohana, these avoidable complications can be especially painful.
Why Updating Your Estate Plan Now Matters
Federal laws change — and your estate plan must evolve with them.
A plan created even a few years ago may no longer function as intended. When we work together, we focus on aligning every piece of your plan with today’s rules and your family’s real-world needs.
This includes:
Reviewing retirement account beneficiaries
Identifying tax traps under the 10-year rule
Updating trust provisions
Coordinating accounts with your overall goals
Creating a clear, current asset inventory
Ensuring your loved ones know exactly what to do
You shouldn’t have to hope your plan works. You should know it does.
Why Comprehensive Estate Planning Makes the Difference
Traditional estate planning often ends when documents are signed. A comprehensive, relationship-based plan goes much further.
It includes:
Ongoing reviews as laws and life change
Strategic beneficiary coordination
Clear guidance for your loved ones
Trusted support when it matters most
The SECURE Act 2.0 is a powerful reminder: static plans fail. Thoughtful, living plans protect families.
Ready to Learn More?
If you want to ensure the SECURE Act 2.0 doesn’t create unnecessary tax burdens or stress for your loved ones, the best first step is a Life & Legacy Planning Session.
Together, we’ll clarify what you have, how the law affects your family here in Honolulu and across Hawaiʻi, and what steps will ensure your wishes are honored — without surprises.
Your family deserves certainty.
Frequently Asked Questions
Does the SECURE Act 2.0 affect Roth IRAs?
Yes. While Roth IRAs don’t have lifetime RMDs, most non-spouse beneficiaries are still subject to the 10-year withdrawal rule.
Should I name my trust as beneficiary of my IRA?
It depends. Trusts can offer protection, but only if properly drafted and updated to comply with current tax law.
Is this relevant if I live in Hawaiʻi but have mainland accounts?
Yes. Federal retirement rules apply regardless of where the account is held.
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This article is brought to you by the Law Office of Keoni Souza, a boutique estate planning firm located in Honolulu, Hawaiʻi, proudly serving families on Oʻahu and across the Hawaiian Islands. At our firm, estate planning is about more than documents — it’s about creating lasting peace of mind for you and the people you love. Through our unique Life & Legacy Planning Process, we guide you to make informed, empowered decisions that protect your wealth, your wishes, and your family’s future. To get started, contact our Honolulu office today to schedule your Life & Legacy Planning Session.
Disclaimer: The information on this website is for informational purposes only and should not be considered legal advice. For guidance tailored to your specific situation, please consult an estate planning attorney licensed in the State of Hawaiʻi. Use of this website or communication through this site does not create an attorney-client relationship with the Law Office of Keoni Souza, LLC.
