Secure Act RMD Requirements

in the last week of December 2019, Congress changed the retirement account landscape passing a new bill awkwardly called the Setting Every Community up for Retirement Enhancement now known as the “Secure Act” which went into effect January 3rd 2020.

This new law will affect every body that has a retirement account. One of the major issues I’m getting questions about is for the change in age for required minimum distributions.  Under the old rule, you had to start taking RMD’s for the year you turned age 70 and a half and the new rule requires you start distributions at age 72. But here’s the caveat, those folks who reached 70 and 1/2 in 2019, are still required to begin taking required distributions before April 1st of 2020 and are not going to be able to delay until age 72. They can only delay taking  RMD’s if they reached age 70 1/2 after December 31st 2019 and everybody who turned 70 and 1/2 during 2019 fall under the old rules and you cannot delay taking distributions until age 72.

For example if John turned 70 in February of 2019, he reached the age 70 and a half before the end of year 2019. He can delay taking his RMD until April of 2020 but with this new rule he will have to take his is required minimum distribution for the year 2019 by April 1st of 2020 and he will have to take his required distribution for 20/20 before December 31st of 2020 because he is under the old rule for RMD’s.

Let’s say Diane celebrated her 70th birthday in September of 2019. This puts her turning 70 and a half in 2020 making her eligible to delay taking her RMD until the following year when she turns 72 years old. Now the latest she can take her RMD for 2021 is April 1st of 2022 and then she will need to take her RMD for 2022 before December 31st of the same year.

I realize this sounds complicated and I will be covering more information about the secure act in future videos but meanwhile if you have any questions you can feel free to give my office a call at 800-WAY-KOOL, or contact me at www.financialadvice360.com,