Required Minimum Distributions Update

Required minimum distributions (RMDs) are the minimum amounts that must be withdrawn from retirement accounts each year for certain retirement plan participants. Forcing distributions to participants from retirement plans ensures the government that taxes are not delayed too long in the future.

The Secure 2.0 Act made the following changes to the required minimum distribution rules which are favorable for retirement participants.

  • Increase in RMD Age
  • Reduction in penalty for failing to take an RMD
  • Eliminate Roth accounts in RMD calculations
  • Allow surviving spouse to be treated as a participant
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    Increase RMD Age
    The SECURE Act in 2019 raised the beginning date for taking RMDs from age 70½ to 72. Three years later, the Secure 2.0 Act raised the age from 72 to 73 effective January 1, 2023, and again to age 75 starting on January 1, 2033.

    This recent change in rules may present confusion regarding when an account holder should begin taking RMDs. The following RMD ages apply based on the participant’s date of birth.

          Birthdates                                  RMD Age
    Born before July/1/1949                       70 ½
    Born 7/1/1949 – 12/31/1950                    72
    Born 1/1/1951 – 12/31/1959*                     73
    After 12/31/1958*                                      75

    * There was an error in Secure 2.0 for those born in 1959, and Congress will need to correct this in future legislation.  A pending corrections bill would change the law to require RMDs at age 75 for those born after 12/31/1959.

    This increase in the RMD age is appropriate, given that participants are living and working longer. Now participants can save more for retirement in their tax-deferred accounts.

    While delaying RMDs will help participants grow their account balance, there may be greater tax implications, especially if participants find themselves in a higher tax bracket in retirement. There are many complexities as well as tax-efficient strategies involved with taking RMDs. As an account holder approaches retirement, it may be wise to consult a professional tax advisor to discuss specific details when taking distributions.

    Reduction in the Penalty for Failing to Take an RMD Distribution
    The SECURE 2.0 Act also reduced the penalty for failing to take an RMD. Effective in 2023, the penalty was reduced from 50% to 25% of the RMD amount not taken. Additionally, the penalty drops once again to 10% if the account owner withdraws the RMD amount previously not taken and submits a corrected tax return in a timely manner. The key takeaway here is if an RMD is missed, the account holder should correct it and report it as quickly as possible.

    Workplace Retirement Plans – Roth Accounts Do Not Need to be Included in an RMD in 2024
    A Roth IRA account holder does not have to take a required minimum distribution from the account. For individuals who own a Roth account in a retirement plan prior to Secure 2.0, the Roth account was included in determining the RMD amount. Beginning for taxable years after 2023, Roth accounts in a retirement plan are not included in calculating RMD amounts. This provision will lower the RMD amount for participants with such accounts.

    Surviving Spouse Treated as Participant in 2024
    Secure 2.0 allows a surviving spouse of a participant who dies before commencing RMDs to elect to be treated as the employee for RMD purposes, thereby delaying when RMDs must commence. A spouse may also lower RMD distributions using his or her date of birth and the universal table factor.

    Many Secure 2.0 provisions are optional, so employers should speak with their service providers about the RMD rules and how they will impact their plans.

    The RMD rules can be complicated, with multiple ages applying to different participant populations. Your TRI-AD representative is available to help you answer any questions you may have about the changes in RMD rules and how they may impact your retirement plan.


    TRI-AD and our Associates’ suggestions or recommendations shall not constitute legal advice. No content on our website can be construed as tax or legal advice and TRI-AD may not be considered your legal counsel or tax advisor. Clients are encouraged to consult with their tax advisor and/or attorney to determine their legal rights, responsibilities, and liabilities. This includes the interpretation of any statute or regulation, federal, state, or local; and/or its application to the clients’ business activities.