Changes to Required Minimum Distributions

By Russell W. Hall, CFP®

With the Secure 2.0 Act and other recent tax laws, there have been many updates to Required Minimum Distribution (RMD) rules that we wanted to summarize in one place.

First RMD

Starting in 2023, you must take the first RMD from your IRA or other retirement account in the year in which you turn 73. 

Then, starting in 2033, the first RMD is in the year in which you turn 75.

For your first RMD, technically you could wait until April 1 of the following year to make the withdrawal.  However, in most cases you don’t want to do that because you would then have two distributions in the following year.

RMDs are calculated using the previous year-end value of the account and a life expectancy factor that the IRS provides (more information here).

Inherited Retirement Accounts

For IRA or other retirement accounts inherited before 2020, there are no changes to the RMD process. 

For accounts inherited in 2020 and after, the RMD schedule now depends on whether the decedent (the person who passed away) was taking RMDs or not. 

If the decedent had not started RMDs, then the balance of the inherited account must be withdrawn within ten years (with exceptions for “Eligible Designated Beneficiaries” (more Information here).

If the decedent had started RMDs, then there is an annual RMD requirement starting the year after the decedent died (based on IRS single-life expectancy table) AND the balance must be withdrawn within ten years.  Note that there was so much confusion about this that the IRS waived the annual RMD requirements for 2021 and 2022.  See chart below.