How will the SECURE Act affect RMD?

The Setting Every Community Up for Retirement Enhancement or SECURE Act brings many changes in the retirement plans. It involves the management of IRAs as well. One of the significant changes is that the Act has extended the starting date for required minimum distributions (RMD) for traditional IRAs and retirement account holders.

Below are the three significant changes you will notice in RMD owing to the SECURE Act.


1 – 72 is the new starting age for RMD

If you’re an IRA owner who turns 70½ after December 31st, 2019, then your first RMD is due for the year you turn 72. The RBD is the April 1st of the following year you turn 72. Earlier, the age limit to start RMD was 70½. However, those who turned 70½ before December 31st, 2019, will remain unaffected by the new Act.


2 – Some will get a two-year RMD break

As per the SECURE Act, IRA owners born in the first half of 1950 are eligible to get a two-year RMD break. If it were for the pre-SECURE Act rules, then they would need to start making withdrawals in 2020 itself. But, now they can site their money and let it grow for the next two years until 2022.


3 – Solution for RMDs that got converted into Non-RMDs

According to old rules, people turning 70½ in 2020 would need to start taking RMDs in the same year. And some of those people already received notices about the same. But the new SECURE Act requires them to wait until 2022. So, if you’re one of those people who received the notice, then please know that you don’t need to make the withdrawal. You can indeed wait until you turn 72.


In brief

Those were the three significant changes you will see in RMD. 72 is the new age limit to start RMD, which were earlier 70½. The Acts gives a two-year RMD break to some, and it also provides a solution for RMDs that it converted into Non-RMDs.