SECURE Act 2.0: Required Minimum Distribution (RMD)
On December 23, 2022, the Congress passed the SECURE Act 2.0 to upgrade the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. Six days later, President Biden signed the legislation into law. Within this SECURE Act 2.0, it has nearly four hundred pages which means there are a lot of significant changes that we all should be aware of. We plan to either share more vlogs or host a webinar to provide more information on the changes within this law.
For this vlog, I would like to focus on the Required Minimum Distribution (RMD) mainly because this change is in effect for year 2023 while the majority of changes will be in effect in 2024. Before this change, the RMD starting age was 72. Now, the starting age is 73 for those who will be 73 between year 2023 to 2032. For those who will be 73 in 2033 and future years, the starting age will be changed to 75. In other words, no retirement account owners will start RMDs in 2023 or 2033. If you were planning to start RMD this year due to your age at 72, you can wait and start next year when you become age 73.
So, if you happened to miss your RMD, the penalty is reduced from 50% to 25% and may even be waived completely if certain requirements or met. You can discuss further with your tax advisor.
If you are curious about how RMD works and how it impacts your retirement account(s), please feel free to contact us anytime.