New RBD in SECURE 2.0 - can someone have two RBDs?

Submitted by Michael Kelsall on Wed, 2022-12-21 22:03

According to the text of SECURE 2.0, the new “Applicable age” under Section 401(a)(9)(C) is:
“(I) In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the applicable age is 73.
“(II) In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75.”

No matter how I puzzle that out, there seems to be an overlap.

Under (I), it seems to be saying that those born after 12/31/1950 AND before January 1, 1960 will have an RBD of 73.

Under (II), it seems to be saying someone born after 12/31/1958 has an RBD of 75.

So that there is an overlap in 1959. For example, someone born 6/15/1959 would:
1) reach age 72 on 6/15/2031 (after 12/31/2022) AND
2) reach age 73 on 6/15/2032 (before 1/1/2033)
meaning an RBD of age 73

but
they also reach age 74 on 6/15/2033 which is after 12/31/2032 meaning an RBD of 75.

Which applies?

Is my math wrong? Or is there a typo?

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Permalink Submitted by David Mertz on Wed, 2022-12-21 22:52

I agree. The reference to age 74 should be to age 73 instead. The earlier version of SECURE 2.0 had a 3-step increase in the age instead of a 2-step increase and they botched the edit when they removed the intermediate step. https://www.congress.gov/117/bills/hr2954/BILLS-117hr2954ih.pdf

Permalink Submitted by Alan - IRA critic on Wed, 2022-12-21 23:21

Should be interesting as plan administrators rush to re program their systems. Once again we have changes effective within days of signing this into law. Some reaching 72 in 2023 will take or receive automatic distributions next year they think are RMDs and may need some form of relief if they have already used up their one permitted rollover.

Permalink Submitted by David Mertz on Thu, 2022-12-22 00:02

Congress will have 10 years to make the technical correction if enacted as is.