SECURE Act: Increase in Age for Required Minimum Distributions (Section 114)

The SECURE (Setting Every Community Up for Retirement Enhancement) Act institutes a number of changes for retirement plan sponsors and participants, including the ability for participants to delay their required minimum distributions, or RMDs, to age 72.

Before the SECURE Act, if you had money in a traditional IRA or an employer-sponsored retirement plan, you were required by law to start taking withdrawals by April 1 following the year you attained age 70½. The minimum amount required to be distributed each year was calculated based on the account balance as of the end of the previous calendar year divided by a distribution period from the IRS’s Uniform Lifetime Table.

The SECURE Act changes the required starting date for RMDs from age 70½ to age 72, and is applicable to those individuals who turn 70½ after December 31, 2019. For anyone who turned 70½ in 2019, the first RMD must still be taken by April 1, 2020. Individuals turning 70½ in 2020 or later will not be required to take their first withdrawal until April 1 of the year following their 72nd birthday. Please note, plan sponsors can still elect to require distributions at an earlier age and, depending on the terms of the plan, individuals may still be able to take money out at 70½, but the new legislation makes that an individual choice and not a requirement.

A notable impact for plan sponsors will be the need to evaluate the new RMD rule and amend plan documents accordingly to reflect the new RMD age of 72. In addition, plan sponsors will also need to evaluate, and likely update, their current policies and procedures for notifying participants of an upcoming RMD.

Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.

 

Schneider Downs Wealth Management Advisors, LP (SDWMA) is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC).  SDWMA provides fee-based investment management services and financial planning services, along with fee-based retirement advisory and consulting services.  Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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