The SECURE Act 2.0 was signed into law on December 29, 2022. The Act brings important updates to Required Minimum Distribution (RMD) rules so we thought it might be useful to clarify them for you.
A Required Minimum Distribution (RMD) is the amount a person needs to withdraw each year from tax-deferred investment accounts as they age. Historically, people needed to begin calculating their RMDs when they turned 70 ½. In 2019, the first version of the SECURE Act was released and changed the RMD age to 72. Most recently, the SECURE Act 2.0 moved the age yet again. Now the RMD ages range between 72 and 75. Here’s an easy way to understand how it applies.
- If you are already taking an RMD from your investment account, you need to continue to do so.
- If you were born in 1950, you need to begin calculating your RMD when you turn 72.
- If you were born between 1951-1959, you need to begin calculating your RMD when you turn 73.
- If you were born in 1960 or later, you will need to begin calculating your RMD when you turn 75.
Note that the penalty for failing to take your RMD has decreased from 50% to 25% and could be reduced to 10% if the individual meets certain guidelines. It’s also important to note that there are also special rules that pertain to required distributions from inherited retirement accounts.
If you have questions about these rules, your investment accounts or other planning questions, please don’t hesitate to reach out as we would be happy to help you. Below is a link where you can schedule a phone consultation with the firm.
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