When do I take my IRA distribution under SECURE Act?

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Q. When do I take my Required Minimum Distribution (RMD) from my IRA? I was born June 5, 1950. Is my 70 1/2 birthday considered to be December 2020 or January 2021?
— Retired

A. Before we get to the specifics of your question, we want to make sure you understand the big changes brought to Required Minimum Distributions (RMDS) with the SECURE Act, which became law on Dec. 20, 2019.

The SECURE Act changes how and when RMDs must be taken, said Michael Cocco, a certified financial planner with Beacon Wealth Partners in Nutley.

Under old rules, a person would have to take their first RMD payment in the year they turn 70 ½, Cocco said.

“In that first year, they can elect to not take their first RMD in the year they turn 70 ½, but then would have to take two RMDs the following year, with the first one being before April 1,” he said. “Under the new SECURE Act, that has raised that RMD age to 72, for anyone who did not turn 70 ½ already by Dec. 31, 2019.

Based on the information you provided, you were not 70 ½ by the end of 2019, Cocco said. That means you are able to wait until the year you turn 72 — which would be 2022 — before you have to take your first RMD.

Alternatively, Cocco said, you still have the ability in your first year of RMDs to delay the first RMD, but then you must take two RMDs in 2023, with one coming before April 1.

“Under the old rules before the SECURE Act was passed, the reader would have had to start their RMD in 2020, as that was the year they turn 70 ½,” he said.

It is important to know that the SECURE Act’s new RMD rules do not affect people who are already 70 ½ and taking RMDs because they are still grandfathered in under the old rules, he said.

“Lastly, it is important to note that for employer qualified plans — 401(k)a, 403(b)a, profit sharing plans — their rules may vary slightly as there may be alternate plan provisions in place, so it is important to refer to your employer’s plan documents and your tax professional to ensure you are in compliance,” Cocco said.

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This story was originally published on Jan. 21, 2020.

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