Take A Look At New RMD Rules

Take A Look At New RMD Rules Image

For U.S. retirees, there used to be this iron-clad rule that you had to begin retirement account withdrawals at age 72. Under a new law passed last year called “SECURE 2.0”, the required minimum withdrawal (RMD) age has changed. You may have more time.

‘Under the SECURE Act of 2019, the RMD age for a terminated participant increased from 70½ to 72 effective in 2020. SECURE 2.0 again changes the RMD age to 73 in 2023, and ultimately to age 75,” reports the National Law Review .

Ultimately, the bottom line is that you may be able to leave your money in your Individual Retirement Account (IRA) or 401(k) longer. Let’s say you turn 75 in 2035 or later, for example. Under the new rule, you won’t have to do an RMD until April 1 of the following year you turn that age.

So longevity has its benefits. In theory, your retirement savings can compound over a longer period of time, which can grow your nest egg — if you can afford to wait. Which accounts does the new RMD apply to? Here’s a list from the IRS:

  • traditional IRAs
  • SEP IRAs
  • 401(k) plans
  • 403(b) plans
  • 457(b) plans
  • profit sharing plans
  • other defined contribution plans
  • Roth IRA beneficiaries

An even better benefit is that RMDs don’t apply to Roth IRAs. If you qualify, a Roth is a must-have retirement account. You’ll pay taxes on contributions, but not withdrawals on money held in the account for more than 5 years.

If you would like to discuss any of these areas or need help, I would be happy to help!

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