Secure act

[gk10002000]

The Setting Every Community Up for Retirement Enhancement Act of 2019, better known as the SECURE Act, includes several amendments to the Internal Revenue Code of 1986, as amended (the Code) focusing on Individual Retirement Accounts (IRAs) and qualified retirement plans. The changes to the Code impact the processing and tax reporting of certain transactions in these accounts.

Changes in the SECURE Act for IRA account holders

Here are five of the principal changes potentially impacting IRA account holders:

1. The required minimum distribution age was raised from 70½ to 72.
   
   For individuals turning 70½ after December 31, 2019, the age to begin required minimum distributions (RMDs) has increased to 72. This means that these individuals do not have RMD obligations until April 1 of the year after they turn 72.
   
   The required minimum distribution rules remain unchanged for those who turned 70½ prior to January 1, 2020.
2. The maximum contribution age has been repealed.
   
   Individuals with earned income can continue making contributions to any IRA beyond the age of 70½. Individuals who want to continue to make contributions beyond this age should discuss their situation with their tax advisor as this can have an impact on RMD requirements or benefits for qualified charitable donations.

[JimGant]

10 hours ago, gk10002000 said:

This means that these individuals do not have RMD obligations until April 1 of the year after they turn 72.

Yeah, this gives you a three month cushion to take your RMD for the previous tax year without penalty (which is significant). But by doing this, then you have two RMDs taxable in the same year, which can mean breaching the next tax bracket. No, unless you think that that three month cushion will mean additional stock market earnings, whatever, just take your age 72 RMD in the appropriate year. Or, by waiting until the next year means not reaching the 85% taxable amount for your Social Security, yeah, another factor to consider....

[gk10002000]

2 hours ago, JimGant said:

Yeah, this gives you a three month cushion to take your RMD for the previous tax year without penalty (which is significant). But by doing this, then you have two RMDs taxable in the same year, which can mean breaching the next tax bracket. No, unless you think that that three month cushion will mean additional stock market earnings, whatever, just take your age 72 RMD in the appropriate year. Or, by waiting until the next year means not reaching the 85% taxable amount for your Social Security, yeah, another factor to consider....

I think it can be  over 1 1/2 years depending on when one's birthday is, i.e. first half of the year or second half of the year you turn 70 1/2 I think. 

[gk10002000]

5 hours ago, gk10002000 said:

I think it can be  over 1 1/2 years depending on when one's birthday is, i.e. first half of the year or second half of the year you turn 70 1/2 I think. 

But you are right, just delaying the start of the RMD is one thing, but the same general life expectancy calculations will still be applied so one will have to make larger RMDs at that time.  Borrow Peter to pay Paul.