75 is the New 70 ½: The Rules for Required Minimum Distribution, Post SECURE 1.0 and 2.0 Acts

Required minimum distributions (RMDs) under I.R.C. § 401(a)(9) were established generally to ensure that individuals begin withdrawing funds from their retirement plans, like 401(k)s and IRAs, at a specific age. The policy helps the federal government collect taxes on these retirement savings, made on a tax-deferred basis. As people live longer, the age for RMDs has been pushed back, giving retirement savings more time to grow. Regulations issued in late July reflect the new rules, and more.

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Related Content

• Required Minimum Distribution Rules for Defined Contribution Plans
  Review changes to RMDs under recent legislation. Under the SECURE Act, the applicable age was raised to 72 for participants born on or after July 1, 1949. The SECURE 2.0 Act further increased the applicable age to age 73 for participants born between January 1, 1951, and December 31, 1959, and to age 75 for participants born in 1960 or later. Also, the SECURE Act provides that, when a participant dies, any undistributed benefits generally must be paid in full to the designated beneficiary (if any) within 10 years of the participant’s death.
• Required Minimum Distribution Rules for Defined Benefit Plans
  Reference this practice note setting forth the RMD rules for defined benefit (DB) plans. DB plans tend not to allow delays in commencing annuities or other forms of payment once the individual attains normal retirement date or retires on a later date. RMD rules require plans to actuarially increase the amount of a participant's accrued benefit (other than a 5% owner participant) if the participant continues working after attaining age 70½ (usually only in a DB plan). Note that neither the SECURE Act nor the SECURE 2.0 Act changed this date to a later date.  Most plans just commence the payment for active participants at 70½ to avoid the actuarial increase.

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