SECURE 2.0: Greater Required Minimum Distribution Flexibility

SECURE 2.0: Greater Required Minimum Distribution Flexibility

February 06, 2023

Most of the key provisions of the newly enacted Securing a Strong Retirement Act of 2022 (SECURE 2.0) are aimed at helping Americans save more for retirement.

But there are several key provisions for those who have retired, will be retiring soon, or are planning ahead for retirement. 

Delayed Required Minimum Distributions

If you’re 72 or younger and haven’t stared taking Required Minimum Distributions (RMDs) from your retirement accounts yet, you’ll get at least one more year to save.

That’s because starting this year, you won’t have to start taking RMDs from retirement plans and Traditional IRAs until you turn 73. Before SECURE 2.0, you had to start taking them at age 72. (Note: if you’re still working, you can delay taking RMDs from your current employer’s retirement plan until you retire, no matter how old you are.)

If you’re a decade or more away from retirement, you’ll get even greater flexibility. Starting in 2033, you won’t have to start taking RMDs until you’re age 75. That’s good news for those born in 1960 or later who want to delay taking RMDs as long as possible.

Tax-free perks for Roth 401(k) contributors

There’s even better news if you contribute to a Roth account at work. Before 2023, you would have had to calculate RMDs separately from both your pre-tax and Roth accounts and withdrawn the required assets from both accounts. Even though Roth distributions are never taxed, you still may have had to take out more from your Roth account than you wanted.

SECURE 2.0 changes this. Starting in 2024, you’ll never have to take RMDs from your Roth account while you’re alive. Your Roth assets can stay there indefinitely until you decide to withdraw them, or you can let your spouse inherit these assets.

When you pass on, the tax-free benefits of your Roth 401(k) will pass on to your beneficiary, in most cases, your spouse.

Now, whether you should or shouldn’t take advantage of these new SECURE 2.0 RMD provisions depends on your situation. If you don’t need your Traditional IRA or pre-tax 401(k) plan assets to live on and you’d like to reduce your current taxable income, you might want to take advantage of either the “age 73” or “age 75” rule in terms of delaying RMDs.

Keep in mind that delaying RMDs may result in larger withdrawals later on, since every year the IRS increases the percentage of non-Roth retirement assets that must be taken out as RMDs, based on your age.

That’s why it’s always a good idea to speak to a tax professional and a financial advisor before you make any critical retirement-related financial decisions.



This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer before you implement any of these strategies.

This article was authored by David Jaeger and Jeffrey Briskin. David is a financial advisor located at Canby Financial Advisors, 161 Worcester Road, Framingham, MA 01701. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 508.598.1082 or Jeffrey Briskin is Director of Marketing at Canby Financial Advisors


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