by Charissa Anderson, CFP®, CDFA®
Senior Vice President
Portfolio and Wealth Management
On December 23, 2022, Congress passed the SECURE Act 2.0. This new legislation builds off its predecessor to further improve the U.S. retirement system. Included in the provisions are changes to required minimum distributions (RMDs). Most notably, the new law further pushes back the age at which RMDs must begin.
On January 1, 2023, the RMD age increased from 72 to 73. In 2033, the RMD age will increase again to 75. This means that no retirement account owners will start RMDs in 2023. If you turned 72 in 2022 or earlier, you will need to continue taking RMDs as scheduled. Below you will see the new SECURE Act 2.0 phased-in timeline for RMD beginning ages.
Source: kitces.com LLC
The SECURE Act 2.0 also eliminates RMDs for Roth accounts in employer plans, such as a Roth 401(k) or Roth 403(b) beginning in 2024. Unlike the previously mentioned provision, this change also applies to individuals who have already been taking RMDs from these account types. Therefore, beginning in 2024, those individuals may stop taking RMDs from Roth plans.
By delaying RMDs, your money has more time to grow tax deferred, but just because the option is available, doesn’t always mean it is the right choice. Postponing RMDs may result in larger withdrawals in the future, potentially pushing you into a higher tax bracket. The decision of when and how much to distribute from a retirement account should be made in collaboration with your tax professional and financial team as part of your long-term planning.
We encourage you to reach out to your portfolio manager if you have any questions about RMDs. Our team welcomes the opportunity to meet you and your tax professional for a coordinated effort on the best strategy for you.
Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.