Required Minimum Distributions (RMDs) are designed so that the government can start recouping taxes from retirement accounts such as traditional (NOT Roth) IRAs, 401(k)s, 403(b), 457 and other tax-advantaged accounts. Congress just passed a law to delay the date at which one must start withdrawing funds and paying taxes on the withdrawals.
The rules on when retirees must take required minimum distributions (RMDs) changed as of Jan. 1, 2020, thanks to the SECURE Act, which was signed into law on Dec. 20, 2019.
The SECURE Act now delays those required
distributions until age 72.
If you were born on July 1, 1949, or later, you do not have to take an RMD until age 72.
If you were born before that, you fall under the old RMD rules, and
you'll be forced to withdraw money (whether you need it or not) every
year starting after age 70½.
"The required minimum distribution for any year is the account balance as
of the end of the immediately preceding calendar year divided by a
distribution period from the IRS’s “Uniform Lifetime Table.” A separate
table is used if the sole beneficiary is the owner’s spouse who is ten
or more years younger than the owner." This info is from the IRS website but they have not yet (1/13/20) updated the site to the new age of 72.
Notably,
RMDs for individuals who turned 70 1/2 in 2019 are not delayed,
and instead, such individuals must continue to take their RMDs under
the same rules prior to passage of the SECURE Act. Despite the delay in
the starting age for RMDs, though, Qualified Charitable Distributions
(QCDs) from IRAs will not be affected by the SECURE Act; accordingly,
QCDs may still be taken from IRAs as early as age 70 1/2. QCDs from TRADITIONAL IRAs allow the taxpaper to contribute directly to a 501(c)3 organization from a taxable traditional IRA and avoid paying taxes on the withdrawal from the IRA.
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