Broker Check
Secure Act 2.0 - RMD Age Changes and Planning Opportunities

Secure Act 2.0 - RMD Age Changes and Planning Opportunities

| December 30, 2022

Beginning RMD Ages Rising
One of the headline changes of the Secure Act 2.0 is the phasing-in of higher beginning ages for Required Minimum Distributions (RMDs) from the current age of 72. The chart below provides a reference based on birth year for the age RMDs begin.

In general, changes do not impact you if you turned 72 in 2022 (or earlier). Turning 72 during 2022 means you must still take your 2022 RMD by April 1, 2023. If you were already taking RMDs, you continue taking them.

  • The 2023 Anomaly: No one begins taking RMD’s in 2023. If you were born in 1950 then you turn 72 in 2022. Accordingly, you take RMDs for 2022. If you were born in 1951, you turn 72 in 2023 and, therefore, do not start taking RMDs until age 73, which will be for 2024.

Review and Refresh Planning Considerations
Although the RMD age changes themselves are straightforward, the planning opportunities are now expanded for many. For one, it extends the number of years before RMD income factors into the tax equation. Further, the delay can provide additional years over which IRA balances can be reduced in seeking to mitigate future RMD income tax impacts.

Now is the time to revisit timelines and related opportunities. Examples include:

  • Qualified Charitable Distributions (QCDs) for those with philanthropic plans. QCD’s remain available starting at 70 ½, currently for a maximum of $100,000. Beginning in 2024, that maximum will be indexed to inflation and adjusted.
  • Roth conversion planning also tops the list to determine whether adjustments are warranted.
  • And much more….

Taken as a whole, there is complexity in fully integrating Secure Act 2.0 changes into individualized plans, including new ways to maximize employer-plan contributions, any additional estate planning considerations, etc. You are investing in yourself by ensuring your plan is fully optimized to best serve your financial health and priorities.

Planning and tax matters are complex, with many restrictions and exceptions. This information is for illustrative purposes only. Your situation may differ. Please consult with your advisor.