The Rules Have Changed for Required Minimum Distributions
Required Minimum Distributions (RMDs) are one of the most consequential tax rules for retirees. Here is a recap of the changes that have happened recently impacting when distributions begin, penalties for missing them, how Roth accounts are handled, and ways RMDs interact with charitable giving and survivor planning.
RMD Age Increases
Previously, most retirees began RMDs at age 72. Under SECURE 2.0, the RMD age increased to 73 beginning in 2023 and will rise again to age 75 in 2033. The change gives retirees more flexibility and tax deferral opportunities, but it also means planning is essential to manage future tax brackets and Medicare premium effects.
Lower RMD Penalties
The penalty for not taking a required distribution used to be one of the highest in the tax code at 50%. SECURE 2.0 reduced the penalty to 25%, and if corrected within two years, it may be reduced to 10%. This provides relief, but it is still important to stay compliant.
Roth 401(k) and Roth Employer Plan RMD Eliminated
A major planning change is that Roth accounts in employer plans such as Roth 401(k)s and Roth 403(b)s are no longer subject to RMDs beginning in 2024. This places them in line with Roth IRAs, which have never required RMDs for the original owner. This strengthens Roth accounts as a long‑term tax‑free retirement planning strategy.
Qualified Charitable Distributions (QCDs)
Qualified Charitable Distributions allow IRA owners age 70½ and older to give directly to a qualified charity and have the distribution count toward their RMD. SECURE 2.0 enhanced QCD rules by indexing the limit for inflation and adding new charitable giving opportunities in specific situations. QCDs remain an excellent way to reduce taxable income while supporting charitable causes.
Annuities and Surviving Spouse Provisions
The rules have also been redefined around annuities within retirement accounts and expanded options for surviving spouses, allowing more flexibility in certain beneficiary planning situations.
Planning Matters More Than Ever
These updates create meaningful opportunities—but also new complexity. Deferring RMDs may reduce taxes now but could create higher taxable distributions later. Roth accounts play an even bigger role in long‑term planning. Charitable strategies may benefit both taxpayers and the organizations they care about. More options…more decisions.