Secure Act 2.0 Changes RMD Age

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The Secure Act 2.0 changes the age at which IRA owners must start taking required minimum distributions (RMDs). There is no change for those already taking RMDs; if you are already required to take RMDs, you must continue to do so. Obviously, many retired Americans take withdrawals from their IRAs because they need the income to live on. But for those who delay withdrawals until the IRS says they have to take them; those ages have changed.

RMD Age Changes

The Secure Act 1.0 changed the RMD age from 70 ½ to 72 for anyone who turned age 70 ½ after December 31, 2019.  Secure 2.0 delays RMDs for those who turn age 72 after December 31, 2022 and turn 73 before January 1, 2033 the first RMD age is 73.  For anyone who turns 74 after December 31, 2032 (born on or after January 1, 1959), the first RMD age is 75.

An unusual effect of 2.0 is that no IRA owner will have their first RMD year in 2023. For those impacted by the new law, the first year that RMD distributions must begin is 2024.

A mistake was made in this legislation; those born in 1959 will have two first-year RMD years.

Still Working Exception

The Secure Act 2.0 does not change those who continue to work who can defer withdrawals from their 401k (and other plans) as long as they continue to work, the “still working” exception.  This exception is for plan participants who do not own more than 5% of the business sponsoring the plan.  Most plans allow the “still working” exception, although optional.

Highlights of Secure 2.0

  • Secure 2.0 Raises the first RMD age to 73 in 2023, then age 75 in 2033
  • The “Still Working” exception remains to defer RMDs for those still working and have 401k and other plans.
  • Delayed RMD presents more opportunities for Roth conversions.
  • QCDs for charity are still available at age 70 ½
  • There will be a lot of confusion with the different required beginning dates.

The Secure 2.0 changes to RMDs are fairly minor. The RMD is pushed back one year and the delay to age 75 doesn’t happen until 2033.

Financial Success Doesn’t Happen by Chance.

Contact lead advisor Chris Robinson, ChFC, at our office, 940-464-4104, to schedule a time to discuss your current questions about Secure Act 2.0 and how it may affect you!

RFG Wealth Advisory in Argyle, Texas, is an independent, fee-only Registered Investment Advisor firm that always puts our client’s interests first. We have a transparent, simple fee structure that’s easy to understand. Call us today!


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