Good news! New legislation, the SECURE 2.0 Act of 2022, is giving retirement savers an extra year before they need to begin taking required minimum distributions (RMDs), extending the opportunity for tax deferral. The new law, widely referred to as SECURE 2.0, includes dozens of amended retirement‐related rules. Let's dig into what SECURE 2.0 means for RMDs from retirement accounts, such as IRAs and employer‐sponsored plans, like 401(k)s.
SECURE 2.0 becomes law
When do the new SECURE 2.0 rules on RMDs become effective?
The RMD rules became effective January 1, 2023.
What is the new starting age for RMDs under SECURE 2.0?
Under SECURE 2.0, retirement savers who turn 72 on or after January 1, 2023, need to begin taking RMDs at age 73. Anyone that turned 72 on or before December 31, 2022, is not affected by this change and needs to continue taking their RMDs as scheduled.
- Under the old law, if you owned a retirement account and turned age 72 in 2023, you had until December 31, 2023, to take your first RMD. However, you had a one‐time IRS option to delay that first RMD until April 1, 2024.
- Under the new law, those turning 72 in 2023 can now hold off on taking the first RMD until December 31, 2024―a full year later. You also have the one‐time IRS option to delay that first RMD to no later than April 1, 2025. However, if you exercise that option and wait until April 1, 2025, you'll be required to take two distributions that year, satisfying your first and second RMD.
Will the required starting age for RMDs change again in the future?
Yes. Under SECURE 2.0, the starting age for RMDs will rise again in 2033 to age 75.
I turned age 72 during or before 2022 and have begun or have planned to begin taking RMDs. Does anything change for me?
No. If you reached age 72 on or before December 31, 2022, you must continue taking RMDs as scheduled each year.
If I'm turning age 72 in 2023, should I update my automatic withdrawal plan to begin my RMDs in 2024?
If you're turning age 72 in 2023, the new law allows you to start your plan a year later, when you turn age 73. If you've set up an automated withdrawal plan to begin RMDs in 2023, you should speak with your tax advisor to decide whether delaying an extra year is right for you.
I turned age 72 in 2022 and do not have to take my first RMD until April 1, 2023. Can I delay my first RMD from my IRA until I turn age 73?
No. The new RMD starting age of 73 applies to IRA owners who turned age 72 on or after January 1, 2023. IRA owners who turned age 72 in 2022 must take their first RMD no later than April 1, 2023 and continue taking RMDs from their retirement account(s) in 2023 and future years.
If I withdraw from my IRA in 2023 when I turn age 72, will I be penalized for taking a withdrawal under the new law?
No. Once you reach age 59 1/2, withdrawals from your IRA are not subject to an early withdrawal penalty, but they are subject to federal and state income tax, if applicable.
If I turned 72 on or after January 1, 2023, and took a withdrawal in 2023, can I redeposit the funds back into my IRA?
Because you qualify to begin taking RMDs when you turn 73 in 2024, your withdrawal in 2023 is not considered an RMD. You can follow normal rules for 60‐day rollovers from the distribution date to redeposit your withdrawal into your IRA. Keep two key points about 60‐day rollovers in mind before redepositing your funds:
- Only one 60‐day rollover in a rolling 12‐month period is allowed under IRS rules. Consult with a tax advisor before doing a 60‐day rollover to ensure whether you're eligible.
- If you withheld taxes from your distribution, you will need to redeposit them to your account out of pocket, and should receive a credit in that amount when you file your taxes for 2023.
How do I complete a rollover contribution to redeposit funds I withdrew from my IRA or retirement account?
If qualify and are within the 60‐day period of the original distribution date, you can complete a rollover as follows:
You can complete a rollover contribution for your 2023 withdrawal via check, transfer from a Fidelity account, or transfer from a bank account you have on file.
To make a rollover deposit by check via mail:
- Make your check payable to: Fidelity Investments
- On the memo line of your check write: "2020 RMD Rollover"
- Mail your check to: Fidelity Investments
PO Box 770001
Cincinnati, OH 45277-0003
You are also able to make a rollover deposit by check via Fidelity's mobile app (excludes Inherited IRA's).
The old law imposed a 50% penalty on any amount of RMD I missed taking in a given year. Does that penalty change under SECURE 2.0?
Yes. SECURE 2.0 reduces the penalty for missed RMD amounts from 50% to 25%. If you miss all or part of your RMD, you can request the penalty be reduced to 10% by (a) taking your missed amount and (b) filing a corrected tax return within the applicable period. You should consult with a tax advisor if you believe that you may owe an excise tax on a missed RMD.
I have a 401(k) with designated Roth 401(k) contributions. Does SECURE 2.0 change the RMD calculation for my 401(k)?
Yes. Like individuals who have a Roth IRA, assets in a Roth 401(k) will be exempt from RMD requirements.
Does SECURE 2.0 change the RMD calculation for my inherited IRA?
Under SECURE 2.0, the RMD rules for inherited IRAs left to beneficiaries remain unchanged, unless you’ve inherited a special needs trust.
Where can I find information about all the changes made under the SECURE 2.0 Act of 2022?
SECURE 2.0 was included in the Consolidated Appropriations Act of 2023, which is viewable in full at www.congress.gov. Fidelity will publish SECURE 2.0 information and additional resources at Fidelity.com/SecureAct as it becomes available.