SECURE Act 2.0 changes to IRA required minimum distributions

Changes to IRA distribution rules starting 2023.

Congress passed yet MORE tax-related legislation in the final days of 2022. ✍️

The Super Voluminous™️ SECURE Act 2.0 contains NUMEOURS changes, particularly around retirement plans.

One change was to Required Minimum Distributions (RMDs) to Individual Retirement Accounts (IRAs).

The initial year for mandatory distributions from Traditional IRAs has been pushed out…yet again.

For those who need their IRA balances to fund retirement, this new rule likely won’t apply as you will actively deplete your account on a regular basis.

However, for those with an abundance of retirement assets, a delay in IRA distributions can be beneficial. For example, you’ll now have a larger window of opportunity over which to convert traditional IRA balances to Roth IRAs, if desired. The downside, is that your account balance now has more time to grow which causes higher RMDs down the road. You want your account’s value to increase! Just keep in mind that this will have tax consequences to manage.

Refer to the table with this article for the new schedule. Note that NO ONE starts RMDs in 2023 or 2034 to give folks extra time to adjust to these change years. So - regardless of your age in 2023 - you won’t be STARTING RMDs this year. But if you are ALREADY on an RMD schedule, stay on it!

Special planning opportunity! ⚠️ You have until April 1 of the year following your initial RMD year to take your first RMD. If you wait until April 1, you’ll still need to take your SECOND RMD in that same year. When starting RMDs, it’s worth a second look to see if it’s more tax-advantageous to push out the initial RMD even though it means doubling up the next year.