At the end of 2022, Congress passed over 90 new tax laws. One of the most important new rule changes is a change in the requirement to pull money out of your retirement account (IRA, 401k, etc.).
The quick and easy way to remember the new rule is to remember the 1950’s. More on this in a minute.
Individual Retirement Accounts, IRAs, are set up to provide Americans with a source of retirement assets and income after they are done working. You may pull money out of an IRA after age 59 ½ without any sort of a tax penalty. If you have a traditional IRA, then you must pay income tax on the withdrawal. If you have a Roth IRA, then your withdrawal is tax-free.
The government forces you to make a withdrawal from a traditional IRA at a certain age. Many of us remember the previous age, under the old rules. It was memorable perhaps because it was so strange: age 70 ½. This is no longer the case. The new age for a required distribution depends upon the year in which you were born.
The following table summarizes the Required Minimum Distribution age:
The quick and easy way to remember the RMD age is to remember the 1950’s. If you were born between the years of 1951 and 1959, then the first year you have to take a required distribution is your age 73. If you are younger, then your RMD starts at age 75. If you are already taking your distribution, then you must continue to take your distribution. No change for you!
For a more complete understanding of retirement accounts, including RMDs and other rules, visit our website:
If you would like to skip the details and see what other tax rules for 2023 affect you, then set up an appointment with your wealth manager!