Three ways the SECURE Acts significantly changed required minimum distributions
The SECURE Acts—both the 2019 and 2022 versions—greatly affected how investors save for retirement and how long their savings can grow tax-deferred. While mostly advantageous, the laws can still be confusing.
One area that has significantly changed and that all investors will eventually face is required minimum distributions (RMDs). While the government allows tax-advantaged retirement savings accounts, once investors reach a specified age, they are required to withdraw a minimum amount from traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k)s, and the like.
Before the legislation, the RMD age was set at 70 ½ for more than 30 years. Not surprisingly, the SECURE Acts changing this age requirement is big news; however, the age requirement is different depending on when the account owner was born. Those born before July 1, 1949, fall under the 70 ½ rule and are most likely already taking RMDs annually. Investors born between July 1, 1949, through 1950 began their RMDs at age 72. Those born between 1951 and 1959 can likely wait until age 73 before taking RMDs. Finally, assuming rules do not change again, those born in 1960 and later should be able to wait until age 75 before they must withdraw from their retirement accounts.
Just because investors can push off RMDs with the new age requirements doesn’t mean they should. Investors will want to consider their tax brackets, tax filing status, if their…
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