RMD Changes for 2023
February 23, 2023
Earlier this month, we discussed the recently-passed SECURE 2.0 Act and its overall impact on retirement. Now let’s focus on one of the key components of this legislation: required minimum distributions (RMD).
The RMD is the amount you must take out of your account to avoid tax consequences and is determined by dividing the retirement account’s prior year-end fair market value by a life expectancy factor published by the IRS.1
Here are some of the new RMD rules made by SECURE 2.0:
- Beginning in 2023, the age to start taking RMDs jumps from 72 to 73. In 2033, it will move to 75.
- You may be able to avoid the 50% excise tax for missing your RMD if your failure to take an RMD was due to “reasonable error” (e.g., serious illness) and you withdraw the necessary amount from your retirement account quickly.2
- The SECURE 2.0 Act does away with the need to roll over funds from a Roth 401(k) to a Roth IRA.2
- The $100,000 qualified charitable distribution limit can be adjusted annually for inflation.2
RMDs are a delicate issue because they can have a massive impact on your retirement income. This is why it is so important to have a strategy in place. We can help determine the ideal withdrawal strategy for you to avoid penalties and potential financial burden. Please contact us to help answer your questions or to schedule a complimentary consultation.
We look forward to helping you!
1. https://www.investopedia.com/terms/r/requiredminimumdistribution.asp
2. https://www.kiplinger.com/retirement/new-rmd-rules