SECURE Act 2.0 impacts on Required Minimum Distributions (RMDs)

March 09, 2023

The Secure Act 2.0, which was signed into law in December 2022, made significant changes to the required minimum distribution (RMD) age for retirement accounts. Prior to the Secure Act 2.0, individuals were required to start taking RMDs at the age of 72. However, the new law raises the RMD age to 75, giving individuals more time to grow their retirement savings.

Here's a breakdown of the new RMD age based on birth year:

Born on or before June 30, 1949: The RMD age remains 70 and a half.

Born on July 1, 1949, through December 31, 1950: The RMD age is now 72.

Born on January 1, 1951, through December 31, 1959: The RMD age is 73.

Born on or after January 1, 1960: The RMD age is 75.

It is notable that, if you turn age 72 in 2023, you will not be required to take your RMD until 2024 as the starting age of 73 took effect on January 1, 2023.

It's also worth mentioning that the new RMD age applies to traditional individual retirement accounts (IRAs), 401(k) plans, and other defined contribution plans as well as Roth designated accounts in an employer sponsored plan. However, effective 2024, all Roth accounts including employer sponsored plans will not be subject to RMDs. That said, if you turn age 73 in 2023 your Roth balances in employer sponsored plans will be subject to RMDs.

In conclusion, the Secure Act 2.0 has significantly changed the RMD age for retirement accounts, giving individuals more time to grow their savings. Based on birth year, individuals will need to start taking RMDs at different ages, with the youngest individuals being required to start at 75. If you have questions about the new RMD age and how it applies to your specific situation, it's always a good idea to consult your financial advisor.