July 10, 2022 - Douglas Myser

Secure Act and minimum distributions. When the Covid pandemic hit, thousands of Americans took money out of retirement accounts to get by and to help children and granchildren get by. In response, the Congress passed an act, and the IRS put it into the Revenue Code, giving Americans better ability to save more for retirement. But it also required them to withdraw at certain points in time. Knowing those changes is crucial to not getting hit with penalties from the IRS. Secure Act and minimum distributions.

The law had previously allowed a surviving spouse to treat a retirement account as their own and start benefits under their RMD at their required beginning date even if the spouse had already begun taking required distributions. Some had worried that although the law moved this age to 72 that spouses that has previously inherited their interest in years prior to the effective date of the Secure Act might still be required to begin distributions at age 70 and a half. The proposed regulations provide for a single age 72 required beginning date for surviving spouses regardless of when they inherited their interest--that is there is no special age 70 and a half rule for those who inherited funds earlier.

There is also a change from the Secure Act interpretation as to the non-spouse beneficiary who is more that 10 years younger than the participant and the participant has died after starting to receive their RMD. The proposed regulations say that the distributions must continue to be made within years 1-9, with the balance of the account to be distributed no later than year 10.

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