Rules for required minimum distributions have changed—here’s a guide on when and how to take them

This article is reprinted by permission from NextAvenue.org. A great feature of traditional individual retirement accounts and employer-sponsored retirement plans like 401(k)s is that their money can grow tax-deferred for years. But eventually, the tax piper must be paid. That’s when Required Minimum Distributions, or RMDs, kick in and federal — plus sometimes state — ordinary income taxes will be due.

RMDs are the minimum amounts you must withdraw from your retirement accounts each year. They are the method by which the government ensures you’ll eventually be taxed on the money you saved tax-free. Rules governing RMDs are a little complicated and they have changed twice in recent years: first, in 2019, with the Secure Act and then in 2022 with the Secure 2.0 law. As Christine Moriarty wrote in her Next Avenue article on year-end tax moves, the Secure Act bumped the age to begin taking RMDs from 70½ to 72 starting in 2020. Secure 2.0 pushed back the threshold even further — to either age 73 for people turning 72 after 2022 or age 75 for people turning 74 after 2032. Your first RMD must be taken by April 1 of the year after you reach the starting age for distributions. Subsequent RMDs have to come out of the retirement plans by Dec. 31 each year. If you choose to delay that first RMD until April 1, you will end up having to take two distributions in that second year, noted Amanda Lott and Sarah Backer in their J.P …

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