RMDs and the new SECURE Act
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Joined: Mar 2009
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From: Worthington, Ohio
RMDs and the new SECURE Act
I am posting this just as an informational thread, and not a political thread, so please do not post any political comments.
There are some new rules regarding when one must take Required Minimum Distributions from tax-deferred accounts. These new rules might affect some of you "younger" vintage people who have not reached the age of 70 1/2 yet.
(The new rules do not affect me nor my husband, because we both turned 70 1/2 quite a long while ago, but I thought some of you others might like to learn about this if you do not already know about it.)
There are also some new rules regarding the inheritance of such accounts for the heirs.
I think that this article is a pretty good summary of some of the new rules, but you might want to do your own research to see how it affects you, or consult your financial advisor.
SECURE Act
From the article:
There are some new rules regarding when one must take Required Minimum Distributions from tax-deferred accounts. These new rules might affect some of you "younger" vintage people who have not reached the age of 70 1/2 yet.
(The new rules do not affect me nor my husband, because we both turned 70 1/2 quite a long while ago, but I thought some of you others might like to learn about this if you do not already know about it.)
There are also some new rules regarding the inheritance of such accounts for the heirs.
I think that this article is a pretty good summary of some of the new rules, but you might want to do your own research to see how it affects you, or consult your financial advisor.
SECURE Act
From the article:
New age-72 start date for required minimum distributions from IRAs and retirement plans
Before the Secure Act, the initial required minimum distributions was for the year you turned age 70 1/2. You could postpone taking that initial payout until as late as April 1 of the year after you reached the magic age.You generally must begin taking annual required minimum distributions (RMDs) from tax-favored retirement accounts (traditional IRAs, SEP accounts, 401(k) accounts, and the like) and pay the resulting income tax hit. However, you need not take RMDs from any Roth IRA(s) set up in your name.
Before the Secure Act, the initial RMD was for the year you turned age 70 1/2. You could postpone taking that initial payout until as late as April 1 of the year after you reached the magic age. If you chose that option, however, you must take two RMDs in that year: one by the April 1 deadline (the RMD for the previous year) plus another by Dec. 31 (the RMD for the current year). For each subsequent year, you must take another RMD by Dec. 31. Under an exception, if you’re still working as an employee after reaching the magic age and you don’t own over 5% of the outfit that employs you, you can postpone taking RMDs from your employer’s plan(s) until after you’ve retired.
New law: The Secure Act increases the age after which you must begin taking RMDs from 70 1/2 to 72. But this favorable development only applies to folks who reach 70 1/2 after 2019. So, if you turned 70 1/2 in 2019 or earlier, you’re unaffected. But if you will turn 70 1/2 in 2020 or later, you won’t need to start taking RMDs until after attaining age 72. As under prior law, if you’re still working after reaching the magic age and you don’t own over 5% of the employer, you can postpone taking RMDs from your employer’s plan(s) until after you’ve retired.
Key point: If you turned 70 1/2 in 2019 and have not yet taken your initial RMD for that year, you must take that RMD, which is for the 2019 tax year, by no later than 4/1/20 or face a 50% penalty on the shortfall. You must then take your second RMD, which is for the 2020 tax year, by Dec. 31, 2020.
Before the Secure Act, the initial required minimum distributions was for the year you turned age 70 1/2. You could postpone taking that initial payout until as late as April 1 of the year after you reached the magic age.You generally must begin taking annual required minimum distributions (RMDs) from tax-favored retirement accounts (traditional IRAs, SEP accounts, 401(k) accounts, and the like) and pay the resulting income tax hit. However, you need not take RMDs from any Roth IRA(s) set up in your name.
Before the Secure Act, the initial RMD was for the year you turned age 70 1/2. You could postpone taking that initial payout until as late as April 1 of the year after you reached the magic age. If you chose that option, however, you must take two RMDs in that year: one by the April 1 deadline (the RMD for the previous year) plus another by Dec. 31 (the RMD for the current year). For each subsequent year, you must take another RMD by Dec. 31. Under an exception, if you’re still working as an employee after reaching the magic age and you don’t own over 5% of the outfit that employs you, you can postpone taking RMDs from your employer’s plan(s) until after you’ve retired.
New law: The Secure Act increases the age after which you must begin taking RMDs from 70 1/2 to 72. But this favorable development only applies to folks who reach 70 1/2 after 2019. So, if you turned 70 1/2 in 2019 or earlier, you’re unaffected. But if you will turn 70 1/2 in 2020 or later, you won’t need to start taking RMDs until after attaining age 72. As under prior law, if you’re still working after reaching the magic age and you don’t own over 5% of the employer, you can postpone taking RMDs from your employer’s plan(s) until after you’ve retired.
Key point: If you turned 70 1/2 in 2019 and have not yet taken your initial RMD for that year, you must take that RMD, which is for the 2019 tax year, by no later than 4/1/20 or face a 50% penalty on the shortfall. You must then take your second RMD, which is for the 2020 tax year, by Dec. 31, 2020.
Thread Starter
Joined: Mar 2009
Posts: 4,396
Likes: 1,366
From: Worthington, Ohio
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