2023 Required minimum distribution
It has come to my attention that people still think of age 70 as the time to start planning on receiving the mandatory Required Minimum Distribution (RMD) from your IRA or 401K Plan. This old law (age 70 1/2) was applicable before year 2020.
The good news is that if you are fortunate enough to not need the funds to enjoy your retirement, you can delay first year only RMD until April 1st after you turn age 73. Otherwise, RMDs must be taken no later than December 31st 2023. To clarify, generally, your first RMD needs to be taken by April 1st of the year FOLLOWING THE YEAR IN WHICH YOU TURN AGE 73. This new tax law (Section 107 of the Secure 2.0 Act passed on December 29, 2022) increased the age from 72 which was effective prior to year 2023.
In other words:
- If you were born in 1950 or earlier, the RMD age is 72 (before 2020 the RMD age was 70 1/2)
- If born after 1950, the RMD age for 2023 is 73
It is imperative that you contact your Retirement Plan Administrator to learn about your Plan specifics.
Another good news is that the penalty for not taking your RMD timely was also significantly decreased, but we do not want to get to a point where you need to deal with any penalties!