Required Minimum Distribution (RMD) Changes
The SECURE 2.0 Act raised the age for taking RMDs from 72 to 73 effective January 1, 2023.
To clarify the distinction regarding when an account holder should begin taking RMDs, those who turned 72:
- In 2022, must take their distribution no later than April 1, 2023.
- In 2023, the required earliest distribution is April 1, 2025, for calendar year 2024.
RMD Penalty Reduction for Failing to Timely Take a Withdrawal
Beginning in 2023, the SECURE Act 2.0 reduces the penalty for late RMDs from 50% to 25% of the RMD amount not withdrawn. Additionally, the penalty drops once again to 10% if the participant withdraws the RMD amount previously not taken and submits an amended tax return in a timely manner. Important: if you miss an RMD, correct it and report it immediately.
It is important to note that the IRS Uniform Lifetime Table that became effective in 2022 will still be applicable for those who do not have to take their RMDs until age 73. Contact us with questions.