RMD for those attaining age 701/2 after 12.31.2019

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joerob58
Posts: 10
Joined: Fri May 03, 2019 8:17 am

RMD for those attaining age 701/2 after 12.31.2019

Post by joerob58 »

FRP calculation question for when to start RMDs. FRP shows 72 years - I believe, at least in my case, at my current age, my RMD will start when I am 73. This is a question for the forum on understanding the NEW rules of RMD beginning distributions.

FRP shows RMD beginning at 72. Is this correct for my age, 69 and new RMD rules based upon CARES Act?

After reviewing IRS Publication 590-B, iRA Distributions....., top of page 2 provides this: "What's New for 2020" (and I assume later years unless changed) "The required beginning date for IRA owners who haven't reached age 70 1/2 by the end of 2019 is - April 1st, OF THE YEAR FOLLOWING the year, of the owner's 72nd birthday."

This leads me to believe that for folks like me, age 69, January, this year, that my minimum RMD will not start until 2025, April 1st of that year. Here is my example:

2021 - 69 yrs - I have not attained age 70 1/2 by end of 2019.
2022 - 70 yrs
2023 - 71 yrs
2024 - 72 yrs - Age of "RMD attainment"
2025 - 73 yrs - RMD is required to begin by April 1st (of the year, following the year, of the owner's 72nd birthday in 2024.

joerob58
Posts: 10
Joined: Fri May 03, 2019 8:17 am

Re: RMD for those attaining age 701/2 after 12.31.2019

Post by joerob58 »

After more digging/reading, I found the year selection for beginning RMDs on the Settings page. I changed to 73. Sorry for the question - I need to read more in the Documentation.

jimr
Posts: 670
Joined: Thu Feb 28, 2008 6:48 pm

Re: RMD for those attaining age 701/2 after 12.31.2019

Post by jimr »

Actually, I'm glad you posted because it adds visibility to this detail in how RMDs actually work.

Previously, when the RMD age was 70 1/2, I had the RMD age hardcoded at 70, which I suppose was off even more.

I set the new default to 72 because I figured that's more conservative and because most people expect to see 72 there rather than 73.

I did run a bunch of test scenarios using age 72 and a bunch with age 73 and I couldn't see any meaningful difference in the results.

joerob58
Posts: 10
Joined: Fri May 03, 2019 8:17 am

Re: RMD for those attaining age 701/2 after 12.31.2019

Post by joerob58 »

Thanks for the reply. I agree, not much difference 72vs73.

target2019
Posts: 12
Joined: Fri Dec 20, 2019 8:41 am

Re: RMD for those attaining age 701/2 after 12.31.2019

Post by target2019 »

There is a potential problem! If you wait until the following year, you end up with two RMDs (72 and 73). That could mess up your Roth conversion strategy, etc. Just an FYI...
Mirroring the option available under current rules, individuals will be able to timely distribute their first RMD at any time during the year in which they reach age 72, or in the following year, up until as late as April 1st. However, similar to current rules, if an individual chooses to take their age-72 RMD between January 1st and April 1st of the following year, they will have to take both that RMD (the age-72-RMD), and a second RMD (the age-73-RMD) by the end of the year (potentially pushing them into a higher income bracket and/or increasing other income-related costs, such as the Medicare Income Related Monthly Adjustment Amount (IRMAA).
https://www.kitces.com/blog/secure-act- ... -qcd-2020/

jimr
Posts: 670
Joined: Thu Feb 28, 2008 6:48 pm

Re: RMD for those attaining age 701/2 after 12.31.2019

Post by jimr »

Thanks for filling in that additional detail. There's always some other angle to consider with this stuff.

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