On December 29, 2022, President Biden signed into law the SECURE 2.0 Act of 2022, a bipartisan piece of legislation effecting changes to many employer-sponsored qualified retirement plans (such as 401(k), 403(b), and other defined contribution plans), as well as to IRAs. One of the most significant of the many changes made was in delaying the age by which required minimum distributions must commence from traditional IRA and traditional 401(k)/403(b)/457 accounts.
The age at which owners of retirement accounts must start taking RMDs will increase to age 73, starting January 1, 2023. Starting in 2033 – ten years later – the age at which required minimum distributions commences is age 75.
Example: Johnnie, born in 1951, turns age 72 on July 15, 2023. The first year he must take a required minimum distribution from his traditional IRA account is 2024.
Example: Sara, born in 1960, turns age 72 on Feb. 12, 2032. Since she has not turned age 73 yet, she is not required to take her required minimum distribution. She will not have to begin to take her required minimum distribution until she attains age 75, which will occur in 2035.
While a technical correction to the legislation, or an adopted IRS regulation, may be necessary to clarify the intent of the law, it appears that those who were born between 1951 and 1959 will commence their required minimum distributions at age 72, while those born 1960 or later will commence required minimum distributions at age 75.
There is no impact of the new law on those individuals who turned age 72 in 2022 or earlier.
This article represents the personal views of its author and is not necessarily representative of the views of any firm, institution, organization, gang, motley crew nor cult to which Ron Rhoades either now belongs or has previously been kicked out of. Dr. Rhoades serves as Program Director for Western Kentucky University’s Personal Financial Planning Program, and as an Associate Professor of Finance in WKU’s Gordon Ford College of Business.
As an educator, Dr. has received numerous educational awards, including the 2020 Gordon Ford College of Business Teacher of the Year Award. Ron also received the 2020 Tamar Frankel Fiduciary of the Year Prize from The Institute for the Fiduciary Standard for applying fiduciary standards to investment and financial advice. Dr. Rhoades frequently visits with policy makers on Capitol Hill, the U.S. Securities and Exchange Commission, and U.S. Department of Labor.
As a J.D., he is a member of The Florida Bar, and has practiced as an estate planning and tax attorney. He has also published several books on financial planning, estate planning and investments topics, and he has written hundreds of articles and blog posts. He often speaks at conferences of financial and investment advisors.