I see the new age for RMDs is 73

If you were born between 1951 and 1958 inclusive, then your RMD age is 73. If you were born in 1959 or later, then your RMD age is 75.

See this post for the exact wording that passed: https://www.early-retirement.org/fo...e-of-secure-act-2-0-a-116132.html#post2871042

Note that the wording is inconclusive if you were born in 1959, and the law could be interpreted such that for people born in that year the starting age is actually 73.
 
Like many of us, I've had to adjust my plans from 70.5 to 72 and now 73... Actually these age changes have potentially helped me work out of other tax traps... Works for me. :)
 
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For me it will be 75.

Does anyone know the reasoning behind the change?
 
COcheesehead said:
For me it will be 75.

Does anyone know the reasoning behind the change?
Click to expand...

People working later? Living longer?

But in general the vast majority need the funds from their IRAs and 401Ks and thus start drawing them down well before RMD age.
 
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COcheesehead said:
For me it will be 75.

Does anyone know the reasoning behind the change?
Click to expand...
Just another of the ton of things that got stuck in the 1.7t bill. I could guess too, but who really knows... Personally I'm happy with this particular change, if I am fully understanding it...
 
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Car-Guy said:
Just another of the ton of things that got stuck in the 1.7t bill. I could guess too, but who really knows... Personally I'm happy with this particular change, if I am fully understanding it...
Click to expand...

I am not sure I understand at all. It is good if you are pro-active and get to spread out withdrawals over a longer period of time. If you wait until you are forced to take RMDs, it seems that could result in getting pushed into a higher tax bracket. Who is this supposed to benefit?
 
jazz4cash said:
I am not sure I understand at all. It is good if you are pro-active and get to spread out withdrawals over a longer period of time. If you wait until you are forced to take RMDs, it seems that could result in getting pushed into a higher tax bracket. Who is this supposed to benefit?
Click to expand...

This is EXACTLY why you do Roth conversions yearly before the start of RMDs.
Convert an amount at least as large as your expected RMD, but no need to go way overboard on conversions...
 
jazz4cash said:
I am not sure I understand at all. It is good if you are pro-active and get to spread out withdrawals over a longer period of time. If you wait until you are forced to take RMDs, it seems that could result in getting pushed into a higher tax bracket. Who is this supposed to benefit?
Click to expand...
I agree. The only real benefit I see is if rather than withdrawing before you hit the delayed RMD age, you convert that amount to a Roth.

It could also benefit people whose heirs are in a lesser tax bracket. But with the 10 year limit on inherited RMDs that seems less likely.

My impression is that this is a "feel good" thing to give retirees without actually costing the government anything in the long term since sooner or later someone is going to pay the tax. The tax can be avoided by giving the money away via QCDs or making charities the beneficiary, but this change really doesn't affect that.
 
jazz4cash said:
I am not sure I understand at all. It is good if you are pro-active and get to spread out withdrawals over a longer period of time. If you wait until you are forced to take RMDs, it seems that could result in getting pushed into a higher tax bracket. Who is this supposed to benefit?
Click to expand...
Yep, looks like it could help a bit for many in avoiding higher tax brackets and potentially IRMAA considerations too..
 
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jazz4cash said:
I am not sure I understand at all. It is good if you are pro-active and get to spread out withdrawals over a longer period of time. If you wait until you are forced to take RMDs, it seems that could result in getting pushed into a higher tax bracket. Who is this supposed to benefit?
Click to expand...

you aren't required to wait
 
Well, this is a fine predicament! My wife was born in June, 1959.
 
They keep moving the cheese (and trap). Lol.

Maybe I should just nibble a bit before then. Or I can convert my cheese into a future snack for someone?

It is 25% government cheese. Made during my best years of churning butter for the man.
:popcorn:
 
Car-Guy said:
Yep, looks like it could help a bit for many in avoiding higher tax brackets and potentially IRMAA considerations too..
Click to expand...

But folks that are facing IRMAA considerations are generally pretty well off. I wish they'd address the IRMAA cliff.
 
COcheesehead said:
For me it will be 75.

Does anyone know the reasoning behind the change?
Click to expand...

The reason stated by the Senator initiating the change is to provide people with more flexibility. Said Senator (I forget which one it is, don't care to look it up right now) has a stated goal of eliminating RMDs entirely.

It also leaves more money in retirement accounts for longer, which increases AUM for retirement account custodians, which increases their AUM fee income. So I could see those custodians being in favor of the change. (Yes, I know that you're not required to spend your RMD, and you can do in-kind distributions if you want, but the average Joe is probably going to look at RMDs as money to be spent. Average Joe is also probably not waiting to 73/75 anyway, so I admit my argument is weak.)
 
jazz4cash said:
But folks that are facing IRMAA considerations are generally pretty well off. I wish they'd address the IRMAA cliff.
Click to expand...
Ha ha, fat chance! I'm afraid it will only get worse although honestly it's just a drop in the bucket in terms of covering Medicare Part B costs.
 
target2019 said:
They keep moving the cheese (and trap). Lol.

Maybe I should just nibble a bit before then. Or I can convert my cheese into a future snack for someone?

It is 25% government cheese. Made during my best years of churning butter for the man.
:popcorn:
Click to expand...

As I tell students, "The second mouse gets the cheese". I'd say about half of them get it. :rolleyes:
 
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