SECURE Act 2.0 ~ Change in the RMD Age as of January 1, 2023

On December 29, 2022, SECURE Act 2.0 was signed into law. The new legislation is designed to modify retirement incentives over the course of several years to retirement accounts which include, but are not limited to, IRA, 401k, 403(b), and Roth accounts.

Effective January 1, 2023, one of the immediate changes of the SECURE Act 2.0 is an increase in the RMD age from 72 to 73.

What you need to know:

  • If you turned 72, or are turning turn 72, as of January 1, 2023, your RMD age will now be 73. If you fall into this category, you are NOT required to take an RMD in 2023. 

  • If you turned 72 on or before December 31, 2022, you are still required to take your RMD for 2022 no later than April 1, 2023. You will also be required to take an RMD for 2023.

For those in the first category above, please disregard the RMD amount on your January account statement from Schwab. Due to the timing of when the legislation was signed into law, there were time constraints to make the necessary statement changes. The RMD amount will be removed from future statements.

Other RMD changes:

  • Effective Jan. 1, 2023, the 50% penalty for failing to take RMDs is cut to 25%. In addition, if the RMD issue is corrected in a timely fashion, the penalty is further reduced to 10%. (The law does not specifically define “timely” fashion.)

  • From 2024 onward, there will no longer be a Roth401(k) RMD for the original account owner.

Rebecca McClure