top of page

Thinking about retirement? Your RMD age probably changed.

Writer's picture: John DannenbringJohn Dannenbring


What is an RMD (Required Minimum Distribution)?

If you know this already, please skip to the next section.


RMDs (Required Minimum Distributions) are distributions that Uncle Sam (the IRS) requires you to take out of certain retirement accounts, specifically tax-deferred retirement accounts.


These accounts gave you a tax benefit when you deposited money into them (Traditional IRA, Traditional 401(k), SIMPLE IRA, just to name a few).


Although you received the tax benefits initially, you’ll still need to pay the piper. When you withdraw monies from these accounts, it’s treated as income, and you’ll pay income taxes on the funds withdrawn.


However, some can wisely spend out of different accounts, pull little from the tax-deferred accounts, and then pass on the money to heirs without paying much in taxes. Sounds great, right?


Not so fast - in order to get money into the government coffers, citizens are required to withdraw a certain amount from their tax-deferred retirement accounts once they reach a certain age (which we’ll discuss below), thus, forcing you to pay taxes.


This is the RMD.


When do I need to begin taking my RMD?


For over 30 years until 2019, the RMD age was 70 ½. In 2020, this changed to 72. Thanks to SECURE ACT 2.0, it’s been pushed back again and depends on your birth year. See below:

Birth Year

RMD Age

1950 or Earlier

72 (70.5 if aged 70.5 prior to 2020)

1951-1959

73

1960 or Later

75

RMDs must be taken by April 1st of the year after you turn the RMD age, but then RMDs are due by 12/31 each year thereafter, including the year you may have delayed payment until April 1st.


Note: if you turned 72 in 2022, you’d still need to take your RMD by April 1st, 2023.


Is this GOOD or BAD?


For most people I work with, pushing back the RMD age has been a net positive for them financially. We now have more flexibility on when to take distributions and are not forced to pay taxes in a year when they may not need the money or could be in a high tax bracket.


There are many other considerations with RMDs, such as how they impact Social Security and Medicare, or even how to calculate the RMD amount, but that’s a topic for another article.


And like everything tax law related, it was written in pencil and may change.


If you know someone approaching retirement who enjoys saving money on taxes, feel free to give this a share.


SUBSCRIBE

Want articles like this sent straight to your inbox? Subscribe below.



 

Some Sources and further reading:



The Legislative Bill changing RMDs (scroll to page 2,000 for the SECURE 2.0 ACT): https://rules.house.gov/sites/democrats.rules.house.gov/files/BILLS-117hr2617eas2.pdf



Risk Disclosure: Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.


This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding the accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.


Comments


402-413-1299

|

​

Lincoln, NE, USA

​

|

AlphaOmega Wealth Management, LLC (“AOWM”) is a registered investment advisor offering advisory services in the State(s) of Nebraska and in other jurisdictions where exempted.  Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute. Follow-up or individualized responses to consumers in a particular state by AOWM in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant an applicable state exemption.

 

All written content on this site is for information purposes only. Opinions expressed herein are solely those of AOWM, unless otherwise specifically cited.  Material presented is believed to be from reliable sources and no representations are made by our firm as to other parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

​

Hyperlink Disclosure

 

The information being provided is strict as a courtesy/convenience. When you link to any of the web sites provided here, you are leaving this website. We make no representation as to the completeness or accuracy of information provided at these websites.

 

AlphaOmega Wealth Management, LLC (“AOWM”) is not liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technology, web sites, information and programs made available through this website.

 

When you access one of these web sites, you are leaving our web site and assume total responsibility and risk for use of the web sites you are visiting. 

 

AOWM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to AOWM’s web site or incorporated herein, and takes no responsibility thereof. 

bottom of page