At the end of 2022, Congress passed a law pertaining to retirement accounts, such as 401(k)s, that affects all investors. The
The law includes several key provisions involving
1. SECURE Act 2.0 RMD age changes
The first version of the SECURE Act, which was passed in 2019, increased the age at which individuals must begin taking required minimum distributions to age 72. Now, with SECURE 2.0, that age has changed again.
Beginning in 2023, the age at which you must start to take RMDs has changed to a sliding scale, depending on your year of birth:
- If you were born in 1950 or earlier, your RMD age is 72.
- If you were born between 1951 and 1959, your RMD age is 73.
- If you were born in 1960 or after, your RMD age is 75.
The SECURE Act 2.0 made these changes in response to longer life expectancies and later retirement dates.
2. Missed RMD penalties reduced
While retirement accounts provide a lot of benefits, you can end up paying
SECURE 2.0 has reduced the potential penalty for failure to take your RMD from 50% to 25%. If you make a mistake but correct it within the correction window, the penalty shrinks to just 10%. The correction window begins on the date the tax is imposed and ends at the earliest of: when the Notice of Deficiency is mailed to the taxpayer, when the tax is assessed by the IRS, or the last day of the second tax year after the tax is imposed.
3. No RMDs for qualified Roth accounts starting in 2024
A big update brought on by the SECURE Act 2.0 affects RMDs for Roth employer retirement plans, such as
This adjustment puts this type of account on the same track as
4. Change in RMD options for inherited IRAs
The rules around RMDs for
The new law now provides surviving spouses the option to calculate RMDs using the
Get professional guidance on how the Secure Act 2.0 may impact you
The SECURE Act 2.0 brought many changes to retirement accounts. It could be helpful to review all the updates with a qualified professional, who can offer personalized insights and answer your unique questions. Reach out to a