Changes to RMDs for Those Born in 1951 or Later (Secure 2.0)

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On December 29, 2022, Biden signed H.R.2617, the Consolidated Appropriations Act of 2023, into law. Hidden within this appropriations bill are several retirement provisions under the section named “Division T – The SECURE 2.0 Act of 2022” (PDF Page 817).

In this series, I am reviewing the major changes created by this act. This article is about “SEC. 107. INCREASE IN AGE FOR REQUIRED BEGINNING DATE FOR MANDATORY DISTRIBUTIONS” (starts on PDF Page 831).

For years and years, the required beginning date (RBD) for required minimum distributions (RMDs) was age 70 1/2. However, the SECURE Act of 2019 increased the age to 72 for required distributions after December 31, 2019 (ie. starting in 2020). Then, the CARES Act of 2020 waived required minimum distribution (RMD) requirements for only tax year 2020, effectively pushing back the required beginning date for some seniors by another year.

Now, SECURE 2.0 has increased the required beginning date again. The law now reads:

  • In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the applicable age is 73.
  • In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75.

Those who attain age 72 after December 31, 2022 are those born in 1951 or later (2023 minus 72).

Under the old rules, those born in 1951 would have been gearing up for their first RMD this year in 2023, as this is their 72nd year. However, the law has now changed. This means that those born in 1951 won’t have to take their first RMD until their 73rd year in 2024.

For those born in the years between and including 1951 and 1958, the applicable age for determining required beginning date is age 73.

Then, SECURE 2.0 has a second age escalation scheduled.

Those who attain age 74 after December 31, 2032 are those born in 1959 or later (2033 minus 74).

It is clear that those born in 1958 will have to take their first RMD in 2031, their 73rd year, under the first clause of SECURE 2.0.

However, as written, it is ambiguous when those born in 1959 will have to take their first RMD. They will have attained the age of 74 in 2033 (1959 plus 74) after December 2032 (the second clause), but they also will have attained the age of 73 in 2032 (1959 plus 73) before January 1, 2033 (the first clause).

This is one of a few technical errors which was accidentally passed in the bill. Most people suspect that Congress will include an amendment in a later bill to clarify. If they don’t, it appears the way to reconcile this ambiguity is to assume that those born in 1959 will have to take their first RMD in their 73rd year in 2032.

Regardless, at least we know that those born in 1960 will have to take their first RMD in their 75th year in 2035 under the second clause.

These new provisions only apply to “distributions required to be made after December 31, 2022, with respect to individuals who attain age 72 after such date.” This means if you were born before 1951, your applicable age is still 72. This clause is included to add clarity to any unique or uncommon beginning date situations seniors may find themselves in.

This also makes clear: If 2022 was your 72nd year, then your required beginning date already arrived and these provisions don’t change anything for you.

Later required beginning dates are generally advantageous to seniors, although the complexity surrounding RMD rules is nothing to celebrate.

Photo by Anna Hinckel from Pexels. Image has been cropped.

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Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.