The SECURE 2.0 Act Has Created Some Retirement Planning Opportunities: RMD Edition

Jan 01

The SECURE 2.0 Act of 2022 makes it easier to accumulate retirement savings at every stage of the financial journey. But the Act also took steps to potentially enhance retirement savings for those close to or in retirement. Required minimum distributions (RMDs) can be burdensome from both an income and a tax planning perspective. The Act creates some breathing room by extending the age at which RMDs kick in and builds in some opportunities to prepare a multi-year plan to maximize income and minimize taxes.

Understanding RMDs

Currently, retirement savings that were contributed to tax-deferred accounts, such as 401(k)s and IRAs, must be withdrawn beginning at age 72. The goal of RMDs is to ensure that taxes are paid on the funds. The amounts are determined by a formula that includes the account balance at the end of the previous year and a life expectancy factor published by the IRS. This can... ...