09 Mar We made a mistake with retirement distributions. Can we undo it?

Q. I am currently gathering my 2022 tax information which includes a 1099 for my wife for her first IRA Required Minimum Distribution (RMD). She was born in 1950. But I just read that Congress changed age rules for the first RMD to age 73. She took her first RMD in 2022 when she turned 72. Does that mean she did not have to take the RMD last year? Or does she still remain subject to the age 72 rule? Can it be redeposited into her IRA?
— Trying to wait

A. The recent rule changes for taking your first IRA distribution has been confusing for some.

Here’s what you need to know.

Congress recently passed the SECURE Act 2.0, which, among other provisions, changes the Required Minimum Distribution (RMD) starting age, said Kelly Henning, a certified financial planner with Modera Wealth Management in Westwood.

“Unfortunately, your wife was born in the last year that the age 72 rules apply,” she said. “Thus, she was required to take her first RMD in 2022 — or anytime by April 1, 2023.”

“She will also need to take an RMD for 2023 and future years as well,” she said.

For future RMDs, one strategy to consider is a Qualified Charitable Distribution (QCD), Henning said. With this strategy, an individual over age 70 1/2 can issue funds directly from their IRA to a qualified charity or charities, Henning said.

“This strategy not only has the benefit of helping charities, but also reduces taxable income from the IRA distribution,” she said. “This strategy can be done on up to $100,000 of withdrawals.”

You should consult with your tax advisor to see if this strategy is right for you.

Also note that the RMD starting age of 73 applies to any individuals whose birth date is Jan. 1, 1951 through Dec. 31, 1959, she said. If an individual’s birth date is after Dec. 31, 1959, the current law states that the RMD start age is 75, she said.

Keep in mind that the CARES Act from 2020 allowed individuals to undo or return withdrawals from IRAs, but that is no longer in effect, Henning said.

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This story was originally published March 9, 2023.

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