Financial Planning: A Change To RMD’s For Post-49’ers
This financial industry and retirees have been trying to figure out what the passage of the SECURE ACT means to them. We’ve spent some time on this over the last couple of weeks, but we keep getting one really important question from readers over the holidays.
We’ll break this down for you by date of birth.
You were born before 1949…
Business as usual if you are already taking RMD’s. The SECURE ACT does not impact you. Continue to take your RMD’s as scheduled.
If you were born between January 1st and June 30, 1949…
Again, business as usual. Since you turned 70 ½ in 2019 hopefully you have already taken your RMD. However, if you didn’t make your distribution in 2019 you’re in luck. You can still take your 2019 distribution as long as you do so prior to April 1, 2020. Remember you will still be on the hook for your 2020 RMD as well as last year’s 2019.
You were born between July 1st and December 31st, 1949…
Winner, winner chicken dinner! The SECURE ACT does affect you. Your first RMD is now 72 instead of 70 ½.
You were born after 1949…
Ding, ding, ding you won the SECURE ACT. Your first RMD doesn’t happen until you’re 72.
RMD’s aren’t to be taken lightly. If you neglect to make your distributions Uncle Sam will penalize you to the tune of 50% of the amount not withdrawn.
I’m sure in the coming weeks we’ll continue to discuss the implications of the SECURE ACT as we receive more questions.The bill certainly accelerates the need for funds outside of Traditional IRA’s and retirement accounts since the Stretch IRA is all but dead.
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