The Plan Robert Built Over 37 Years: What Texas Retirees Get Wrong About RMDs, Beneficiaries, and the New Inheritance Rules

The Plan Robert Thought Was Done

Robert Caldwell had done everything right. Thirty-seven years at Raytheon's McKinney engineering campus. A $1.9 million traditional IRA built through decades of disciplined contributions and employer matching. A paid-off home in Stonebridge Ranch that his financial planner estimated at $685,000. And at age 60, a carefully constructed estate plan from a Dallas attorney that named his two adult children as equal IRA beneficiaries: Angela, a McKinney middle school teacher earning around $58,000 a year, and David, a cardiologist at Texas Health Presbyterian in Allen earning around $520,000 a year.

The plan was elegant. Angela and David would each inherit roughly $950,000 in IRA assets. Under the rules in place in 2011, each of them could stretch distributions over their own life expectancy — Angela over thirty-plus years, David over a similar span. The IRA would keep growing, distributions would be modest, and the tax hit would be spread over decades. It was the kind of plan that makes financial advisors and estate attorneys feel good about their work.

Robert turned 75 in 2026. His financial planner scheduled the routine required minimum distribution review. And Robert mentioned, almost as an afterthought, that he should probably dust off the estate plan — the last update was fifteen years ago.

What the review found changed the conversation entirely.

The SECURE Act — signed into law in December 2019, while Robert was visiting his grandchildren in Scottsdale — had abolished the stretch IRA for non-spouse adult beneficiaries. Angela and David could no longer spread withdrawals over their lifetimes. They each had exactly ten years after Robert's death to withdraw every dollar from their inherited IRA, at their ordinary income tax rates, on top of whatever income they were already earning in those ten years.

For Angela, the math was survivable. A teacher's income meant the inherited distributions would be meaningful but not catastrophic.

For David? Each year of the mandatory ten-year window, roughly $95,000 minimum would land on top of $520,000 in physician income. The federal marginal rate on that incremental income would be 37%. Texas has no income tax, but this is federal ordinary income — and the no-tax advantage doesn't reach IRA distributions. The plan Robert built over 37 years was going to cost his son roughly $350,000 in additional federal taxes that it didn't have to cost.

The plan wasn't wrong when it was written. The law changed. The plan didn't.

What Changed: The Two Laws That Rewrote Retirement Estate Planning

Most Texas retirees are aware, vaguely, that Congress has tinkered with retirement account rules in recent years. Few understand what actually changed — or why it matters for their estate plan specifically.

The Stretch IRA Is Gone

Before December 2019, a non-spouse beneficiary who inherited an IRA — an adult child, a sibling, a niece — could take what the industry called "stretch IRA" distributions: annual withdrawals calculated over their own life expectancy. A healthy 45-year-old inheriting an IRA had a life expectancy factor of roughly 38 years under IRS tables. They could take modest, tax-manageable distributions for nearly four decades. The IRA kept compounding. The tax hit was spread thin.

The SECURE Act of 2019 (Public Law 116-94) eliminated this approach for most non-spouse beneficiaries. Under the new rules, designated beneficiaries who are not a surviving spouse, a minor child, disabled, chronically ill, or within ten years of the decedent's age must empty the inherited account within ten years of the owner's death. No stretching. No life-expectancy calculations. Ten years, then zero balance. If the original owner had already begun taking required minimum distributions before death, beneficiaries may also need to take annual distributions during those ten years — not just wait and empty the account in year ten.

The impact is felt most sharply by high-earning adult children. A physician, an executive, or a successful small business owner inheriting a $950,000 IRA on top of an existing six-figure income faces mandatory distributions that land at the top marginal rates. The estate plan designed to pass wealth efficiently may instead be designed to maximize the IRS's share.

The RMD Starting Age Has Moved — Twice

Before 2020, required minimum distributions from traditional IRAs and most employer plans began at age 70½. The SECURE Act moved that starting age to 72. Then the SECURE 2.0 Act of 2022 (Public Law 117-328) moved it again — to age 73 for those born between 1951 and 1959, and to age 75 for those born in 1960 or later.

This means that Texas retirees who are currently 73 or 74 may have a two-to-three-year window between when they could have started distributions and when they must. That window matters for Roth conversion planning, for sequencing IRA distributions against Social Security, and for the estate planning strategies described below. It is not free time — it is a planning window that closes at the required beginning date.

The Three Gaps Inside Most Texas Retirees' Estate Plans

Robert's situation is not unusual. An estate plan that hasn't been reviewed in ten to fifteen years almost certainly has at least one of these structural gaps.

Gap 1: Beneficiary Designations That Bypass Everything Else

The most common misunderstanding in retirement estate planning is this: your will controls your IRA. It does not. Under federal law and Texas estate law, a beneficiary designation on an IRA, 401(k), 403(b), or similar account is the controlling document. If your beneficiary form names your adult children directly, they inherit directly — regardless of what your will says, regardless of whether you have a trust, regardless of whether the trust was specifically designed to receive the inheritance and control how it's distributed.

Many Texas retirees created revocable living trusts years ago to avoid probate. They retitled their home, their investment accounts, sometimes their brokerage accounts — and left their IRA beneficiary designation unchanged because "the attorney handled all of that." In most cases, the IRA designation form still names the same individuals it named when the plan was first drafted, sometimes decades ago.

This matters beyond the SECURE Act. Outdated beneficiary designations can name an ex-spouse (federal law requires a former spouse to formally waive their beneficiary rights to lose them on a 401(k); a post-divorce name on the form can still control). They can name a deceased person, sending the account into the estate and through probate. They can name a minor child directly, triggering a court-supervised guardianship of the estate under Tex. Prop. Code § 142.001 rather than a clean transfer to a trust.

The first step in a retirement estate plan review is simple but non-negotiable: pull every beneficiary designation form currently on file and compare it against what the plan is supposed to accomplish. In most cases, they don't match.

Gap 2: The 10-Year Trap Hits High-Earning Heirs Hardest

For a Texas retiree with children whose incomes differ significantly — as is common in a generation where one child pursued medicine or finance and another pursued teaching or public service — the SECURE Act's mandatory 10-year rule creates an equity problem that no one asked for.

Equal IRA shares don't produce equal outcomes. The same dollar of inherited IRA distribution costs a schoolteacher in the 22% federal bracket roughly half what it costs a cardiologist in the 37% bracket. An estate plan that treats heirs as equals in dollars may be treating them as unequals in after-tax dollars in a way the original plan never intended.

The solutions are estate-planning decisions, not just financial ones: differential inheritance structures that route pre-tax IRA assets toward lower-bracket heirs while routing step-up assets to higher-bracket ones; Roth conversions during the owner's lifetime that eliminate the deferred-tax liability before it's inherited; charitable remainder trusts or qualified charitable distributions that remove tax-heavy assets from the estate while funding philanthropic goals. None of these decisions should be made in isolation, and all of them interact with the broader Texas estate plan.

Gap 3: The Step-Up in Basis Window Most Retirees Miss

While Texas retirees worry about IRAs and RMDs, many overlook the most powerful tax benefit available to married Texas couples: the community property step-up in basis at death.

Under IRC § 1014(b)(6), when a Texas spouse dies, the entire community property estate — both the decedent's half and the surviving spouse's half — receives a new cost basis equal to the fair market value at the date of death. In a common-law state, only the deceased spouse's half steps up. In Texas, the entire community portfolio steps up — a benefit worth hundreds of thousands of dollars in unrealized capital gains for couples who have held appreciated stock, real estate outside their primary home, or other long-held investments.

The trap is titling. If community property has been retitled as joint tenancy with right of survivorship (JTWROS) — as many Texas couples do, often on their financial advisor's recommendation — it may lose its community property character and the double step-up that goes with it. The asset passes cleanly to the surviving spouse, but with only a half step-up instead of a full one. For a couple holding $600,000 in appreciated stock with a $40,000 original basis, the difference between a full step-up and a half step-up can be $140,000 or more in avoidable capital gains tax for the heirs.

Reviewing how community property is titled — and correcting JTWROS designations where appropriate — is one of the most valuable and least time-consuming updates available to married Texas retirees. (For a detailed breakdown, see our post on the Texas community property double step-up in basis.)

The Trust Fix — and the Trap Inside It

The natural response to the 10-year trap is to name a trust as the IRA beneficiary. A trust can control distribution timing, protect assets from creditors, and route inherited IRA income to beneficiaries in a tax-managed way. For a high-earning adult child, a properly structured trust can make the difference between the mandatory 10-year rule and a more measured approach.

But trusts as IRA beneficiaries come with their own technical requirements. Under Treas. Reg. § 1.401(a)(9)-4, a trust named as an IRA beneficiary must qualify as a "see-through trust" to be treated as a designated beneficiary rather than an entity — which would trigger even faster distribution rules. A see-through trust must be valid under state law, must become irrevocable at the owner's death, must have identifiable human beneficiaries, and must provide documentation to the plan administrator by October 31 of the year following the owner's death.

Within the see-through category, there are further choices: a "conduit trust" passes distributions directly to beneficiaries (simpler, but provides less control and less creditor protection) and an "accumulation trust" can retain distributions within the trust (more protective, but all trust income not distributed is taxed at compressed trust tax rates, which reach 37% at just $15,650 of income in 2026). Getting this wrong — using a standard revocable living trust that wasn't drafted with IRA distribution rules in mind — can produce worse tax outcomes than naming the individual outright.

The IRA-as-trust-beneficiary analysis is one of the more technically demanding areas of estate planning. It requires coordinating federal income tax rules, IRA plan document requirements, Texas trust law under Tex. Prop. Code § 112.031, and the specific circumstances of each beneficiary. This is precisely the intersection where Carla Alston's NYU Tax LL.M. and 39 years of practice — including a decade navigating inherited IRA planning for complex family structures — becomes relevant. (See also our detailed analysis of the inherited IRA 10-year rule and its implications for Texas families.)

What Robert Did

Robert's 2026 estate plan review produced four changes, none of which were dramatic individually but which together meaningfully improved what his heirs would receive.

First, he updated his IRA beneficiary designation to name a trust for David's share — a properly structured see-through accumulation trust designed to receive IRA distributions and control their release over the ten-year window in a way that smoothed David's taxable income rather than stacking it. Angela remained a direct individual beneficiary; her tax situation made the trust unnecessary and the simplicity appropriate.

Second, he completed a series of Roth conversions spread over the two remaining years before Medicare's income-related premium adjustment thresholds would make the conversions more expensive. Converting a portion of the traditional IRA to Roth — paying taxes now at his current rates — reduced the eventual inherited IRA balance that would be subject to the 10-year rule and transferred it into an account that, when inherited, produces no taxable income to his children.

Third, he reviewed the titling on his taxable brokerage account, confirmed its community property character under Texas law, and documented it. The account would receive a full community property step-up in basis at his death regardless of which spouse died first — preserving an estimated $142,000 in unrealized gains that would otherwise have generated capital gains tax.

Fourth, he signed a new durable power of attorney under the current requirements of Tex. Est. Code ch. 751. His 2011 form predated the 2017 Texas DPOA Act overhaul and was likely to be rejected by title companies and financial institutions if Angela ever needed to act on his behalf before death.

None of these changes were obvious from outside the plan. All of them required understanding how federal retirement tax law, Texas estate and trust law, and Robert's specific family situation intersected — and that understanding didn't exist in the 2011 plan, because the SECURE Act didn't exist yet.

The Retirement Estate Planning Checklist

For North Texas retirees approaching or past 73, the following review points cover the areas most likely to produce unintended outcomes under current law:

• Beneficiary designations: Pull every IRA, 401(k), 403(b), life insurance policy, and bank/brokerage account. Verify that named beneficiaries are living, that no ex-spouse appears, that minors are not named directly on accounts that would trigger court-supervised guardianship, and that each designation aligns with the overall estate plan.
• Inherited IRA tax modeling: If your adult children are in significantly different tax brackets, model the after-tax inheritance for each under the 10-year rule. Equal shares in dollar terms may not be equal in outcome.
• Roth conversion window: Between the current RMD age and full Social Security, Medicare premium thresholds, and future bracket changes, there is usually a conversion window that reduces the pre-tax IRA balance available to be inherited under the 10-year rule. The analysis is math-dependent and time-sensitive.
• Community property titling: Review brokerage and investment accounts for JTWROS designations that may have converted community property to joint tenancy, forfeiting the community property double step-up benefit at death.
• Trust as IRA beneficiary: If a trust is named as IRA beneficiary — or should be — verify that it qualifies as a see-through trust under current IRS regulations, and that the conduit/accumulation structure matches the intended planning goals.
• Power of attorney currency: Texas's 2017 DPOA Act overhaul changed the requirements for real-property transaction authority and other express powers. A pre-2017 POA may be rejected by title companies and financial institutions at the moment it's needed most.
• Plan date: If the estate plan hasn't been reviewed since before December 2019 — when the SECURE Act became law — it was written under a set of rules that no longer apply. Update it.

Questions About Your Retirement Estate Plan?

WG Law's estate planning team — led by Taylor Willingham, who has served more than 10,000 Texas families over his career, and Carla Alston, whose NYU Tax LL.M. and 39 years of practice make her one of the most qualified tax-smart estate planning attorneys in North Texas — helps retirees close the gaps that open when the law changes and the plan doesn't.

Our offices are in McKinney (7701 Eldorado Pkwy, Suite 200) and Southlake (1560 E Southlake Blvd, Suite 100, Office 116). We serve clients throughout Collin County, Denton County, and across the DFW metroplex.

To speak with our team, call 214-250-4407 or request a consultation online. For more reading, see our guides on what estate planning costs in Texas, WG Law's Estate Planning practice, tax-smart estate planning, and Carla Alston's background and focus areas. Our attorneys' credentials and focus are also summarized on Taylor Willingham's bio page.

This article is general information, not legal advice. Federal retirement tax law, the SECURE Act and SECURE 2.0 Act, IRA distribution rules, and Texas estate and trust law are fact-specific, interact in complex ways, and are subject to legislative change. Consult a licensed Texas estate planning attorney and a qualified tax advisor before making decisions about beneficiary designations, Roth conversions, or trust structures for inherited retirement accounts.