The age when older Americans must start making withdrawals from retirement accounts could change yet again.
Under a provision in proposed retirement legislation pending in Congress, required minimum distributions, or RMDs, would start at age 75 by 2032, up from age 72 — which only took effect last year after the 2019 Secure Act raised it from age 70½.
I figure Ed Slott has been asked this question a million times, “How much do I need to retire?”, but I ask it anyway.Like anything in life, the true answer is a little more nuanced
Any IRA owner turning age 72 this year will have a required minimum distribution due for 2021, but the due date for taking that RMD will depend on the half of the year in which they were born. June 30 is the cut-off date when the transition to the SECURE Act age 72 RMD rule becomes complete.The SECURE Act raised the RMD age for owners of individual retirement account owners and certain retirement plan participants from 70½ to 72, but only for those who turned 70½ in 2020 or later.
The issue involves the 10-year rule that most non-spouse designated beneficiaries (like adult children or grandchildren, and certain qualifying trusts) who inherit individual retirement accounts will be subject to under the SECURE Act.It was expected that the 10-year rule would work the same way as the 5-year rule: There wouldn’t be annual required minimum distributions, but the entire inherited IRA account balance would have to be withdrawn by the end of the 10-year term.
This is my third update on the confusion about the 10-year rule on required minimum distributions under the SECURE Act, and it won’t be the last. Last Thursday, the IRS acknowledged that IRS Publication 590-B, which contains the tax rules for withdrawing funds from IRAs, is being revised, likely to fix the error I wrote about twice before here, in “IRS: SECURE Act’s 10-year RMD rule is not what you thought” on April 12 and “Weighing in on disputed language in IRS 10-year RMD rule” on April 28.
Congress has come up with what some are calling SECURE 2.0, or Son of SECURE — a bill entitled Securing a Stronger Retirement Act that includes many positive changes to encourage retirement savings. However, one seemingly pointless proposal in the legislation would raise the required minimum distribution age from 72 to 75 over 10 years.Most advisers might argue that consumers will probably love this
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If you are working with an eye towards retirement or even semi-retirement, you are probably (hopefully) saving more than you could in the past in your retirement accounts.You may have paid off the mortgage and paid for college and other heavy expenses of raising children
In late March, IRS released IRS Publication 590-B, which contains the tax rules on withdrawing funds from individual retirement accounts.Normally this is a wrap-up of rules to use as guidance in preparing tax returns
