Age73+ Law changes 2023 for IRAs and Retirement plans

What you need to do:

Persons born before 1951 of the year-end deadlines to take Required Minimum Distributions (RMDs) from funds held in individual retirement arrangements (IRAs) and other retirement plans must note new requirements under the law beginning in 2023.

Required minimum distributions, or RMDs, are amounts many retirement plan and IRA account owners must withdraw each year. RMDs are taxable income and may be subject to penalties if not in a timely manner. For individuals born before 1951, RMDs from IRAs and retirement plans should, for the most part, already have begun and are required for 2023.

New for 2023:

The Secure 2.0 Act raised the age at which account owners must begin taking RMDs. For 2023, the age at which account owners must start taking required minimum distributions goes up from age 72 to age 73, so individuals born in 1951 must receive their first required minimum distribution by April 1, 2025.

Rules for Types of Retirement Plans

IRAs: The RMD rules require individuals to withdraw from their IRAs (including SIMPLE IRAs and SEP IRAs) every year once they reach age 72 (73 if the account owner reaches age 72 in 2023 or later), even if they’re still employed.

Roth IRAs are not required to take withdrawals during their lifetime. However, after the account owner’s death, a Roth IRA’s beneficiaries are subject to the RMD rules.

Retirement plans: The RMD rules also apply to employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. Participants in employer-sponsored retirement plans can only take their RMDs once they retire unless they are a 5% owner of the business sponsoring the plan.

Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2023. Beginning in 2024, designated Roth accounts will not be subject to the RMD rules while the account owner remains alive.

See further information at Notice-IRS 2023-246

• See Retirement Plan and IRA Required Minimum Distributions FAQs for more detailed information regarding the new provisions in the law.
• The RMD Comparison Chart highlights several of the basic RMD rules that apply to IRAs and defined contribution plans.
• RMD calculations and tax on missed distributions
• The IRS has worksheets to calculate the RMD and payout periods.
• Inherited IRAs