Federal law requires investors with an IRA to take minimum distributions (RMDs) each year. The SECURE Act changed that law. Then SECURE 2.0 changed the law again. If you can't remember when your RMDs are scheduled to begin, we don't blame you. For the avoidance of doubt, here are the current rules:
If you were born before July 1, 1949, you began taking RMDs when you turned 70 ½.
If you were born between July 1, 1949 and December 31, 1950, you began taking RMDs when you turned 72.
If you were born between January 1, 1951, and December 31, 1959, you will begin taking RMDs in the year you turn 73.
If you were born anytime after January 1, 1960, your RMDs begin in the year you turn 75.
You can take penalty-free withdrawals from an IRA, 401k, or similar retirement plan any time after age 59½. Of course, withdrawals still incur regular income tax, so it's most tax-efficient to delay them as long as possible. Between retirement and the time RMDs begin, a taxable investment account can be a big help to minimize high-tax withdrawals from an IRA. If you would like help setting up a taxable investment account or finding the right balance between withdrawals from your various account types, we're always happy to hear from our clients.
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