Most retirees know that once they reach age 73 (if born after 1950), they are required by law to take required minimum distributions (RMDs) from their retirement accounts.
But when it comes to financial planning, nothing is ever simple.
The rules regarding RMDs have changed significantly over the past few years. uk db center These changes, other rules regarding how and when RMDs occur, and the changing nature of retirement have created complex planning scenarios that affect all retirees in very different ways.
To maximize your savings, be sure to discuss these little-known facts about RMDs with your financial advisor:
1. Inherited IRAs have unique RMD rules.
Beneficiaries used to be able to take RMDs based on age and IRS life expectancy tables. The SECURE Act of 2019 eliminated those “stretch” distributions. Now, people who inherit an IRA generally must take annual distributions and drain the account within 10 years. Surviving spouses have some additional options, including taking a lump sum distribution or treating the inherited IRA as their own, and taking RMDs starting at age 73.
2. RMD is applicable to various account types.
Most discussions about RMDs typically focus on 401(k)s and IRAs, the most common types of retirement accounts. But tax-deferred accounts like 403(b), 457 plans, SEP IRAs and SIMPLE IRAs all have their own unique RMD rules that you and your advisor should plan around.
