RMD Age Raised to 73 Beginning in 2023
Barry Weller
by Barry L Weller, EA
On December 29, 2022, “The SECURE 2.0 Act” was signed into law. The intention of this law was to build on earlier legislation “Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019”. One provision of SECURE 2.0 is to increase the age for Required Minimum Distributions (RMD’s) from age 72 to age 73 beginning on 1/1/2023. This law will also increase the age again from age 73 to age 75 beginning on 1/1/2033.
Other features of the SECURE 2.0 ACT are…
Reduced penalties for not taking RMD’s.
Mandatory automatic enrollment in new 401(k) and 403(b) plans beginning after 12/31/2024.
Increase in the “catch-up limits” for those age 50 and older from $6,500 in 2022 to $7,500 in 2023 for 401(k) and 403(b) plans. For SIMPLE plans the catch-up contributions increased from $3,000 in 2022 to $3,500 in 2023. (Salary reduction contributions are not treated as catch-up contribution until the regular maximum contributions are made, $22,500 for 401(k) plans and $15,500 for SIMPLE plans.)
A second “catch-up limitation” beginning in tax years after 2024 for those age 60, 61, 62 or 63. This second catch-up is $10,000 for 401(k) and 403(b) plans and $5,000 for SIMPLE plans.
Before SECURE Act 2.0, retirement plans could automatically distribute accounts of less than $5,000 to former participants. If the distribution was greater than $1,000, the plan had to roll the account into an IRA. SECURE 2.0 increases the limit for automatic rollover from $5,000 to $7,000.
Barry L Weller, EA is the president of Barry Weller & Associates with offices at 19 N Reading Ave, Boyertown, PA 19512 Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS. (updated 1/20/2023)