At the end of March, the U.S. House of Representatives overwhelmingly approved the SECURE Act 2.0 with bipartisan support, enabling the bill to be revised in the Senate before passing into law. The Senate’s version is with the Senate Finance Committee presently.
The Securing a Strong Retirement Act expands upon the original Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. It is designed to improve retirement savings accounts by including provisions to allow small financial incentives for contributing to 401(k) or 403(b) plans, providing a searchable national lost-and-found registry for missing retirement funds and allowing employers to offer matching retirement contributions to employees paying off student loans, among other features.
The original SECURE Act increased the age at which point workers have to start making withdrawals, or required minimum distributions (RMDs) from their retirement accounts from — moving from age 70.5 to age 72 for people born on or after July 1, 1949. The SECURE Act 2.0 increases this threshold to those age 73 on Jan. 1, 2022, to those age 74 on Jan. 1, 2030, and to those age 75 on Jan. 1, 2033.
But will the passing of the SECURE Act 2.0 change anything for retirees currently facing a requirement to take their initial RMD payments? Speaking to Barron’s, Brett Gersack, senior wealth advisor at Halbert Hargrove, says that the passing of the SECURE Act 2.0 won’t change some rules currently in place regarding RMDs, yet that the changes in delaying the age of initial RMDs will be helpful for many retirees.
The age at which seniors must start taking RMDs is 73 for people who turn 72 after December 31, 2022. Applying the rules to a senior turning 72 this November, however — that person will need to take RMDs starting this year.
According to Forbes, required minimum distributions allow the U.S. Treasury the opportunity to begin tax revenue collection from your tax-deferred savings and keep them from becoming an estate planning device. Giving three extra years to wealthy retirees who don’t need RMDs for income helps by giving them more time defer taxes owed.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: SECURE Act 2.0: Retirees May Still Be Required to Take Their Initial RMD Even if The Senate Passes the Bill