After your 72nd birthday, federal tax law generally requires you to withdraw a minimum amount from your retirement savings plans each year. These withdrawals are called mandatory minimum distributions (RMDs). Therefore, these people will only have one additional year in which they will not be required to take an RMD. To maintain consistency with the direct change in the age at which RMDs begin, the SECURE Act includes text that applies the age change to these important benefits for spousal beneficiaries, including Self-Directed Gold IRAs. Another important side effect of the delay in the age at which RMDs should start is that it could increase two benefits available to surviving beneficiary spouses who choose to remain beneficiaries of the Self-Directed Gold IRA or of the employer-sponsored retirement plan account (instead of, for example, transferring the inherited account to a retirement account in their name).Participants in employer-sponsored 401 (k), 403 (b) and similar (not IRA-based) retirement plans will continue to be able to delay RMDs to a later age, as long as they continue to work and meet the requirements of Section 401 (a) (c) (ii) (i) of the IRC.
However, as a result of the change in the age at which RMDs begin, an IRA owner's mandatory start date is now delayed to April 1 of the year following the year in which they turn 72 (the same age applies to plan participants, unless an exception applies, such as the “Still Working” exception). You must calculate your RMD for each IRA separately, but you have the flexibility to deduct your full RMD amount from a single IRA or from a combination of IRAs. Therefore, although IRA holders (QCDs can only be created with IRAs) will not have to start withdrawing RMDs from their IRAs until they turn 72, they can continue doing QCD with those accounts once they turn 70 and a half years old (it should be noted that not only the year in which they turn 70 and a half years old, such as RMDs; in the case of QCDs, the person must turn 70 and a half). The SECURE Act will provide one or two more years in which revenues can be maintained at lower levels, allowing for additional opportunities for partial conversions to the Roth IRA, or simply to prevent RMDs from pushing people up tax brackets, paying higher IRMAA, or increasing other income-related costs.
Traditionally, so-called “sabbatical years” have generally been understood to represent the years that elapsed between the time a person retired and the time when they began receiving Social Security benefits and receiving RMDs. A notable change that will result from the SECURE Act will be the increase in the age at which required minimum distributions (RMD) must begin. For those who could afford to delay IRAs and Social Security until required to do so (or, in the case of Social Security benefits, until there was no longer a good reason to delay benefits), sabbatical years ended when Social Security and RMD income began to arrive, often at about the same time, since Social Security began at age 70 and RMD in the Year in which a person turned 70 and a half years old. If you have multiple IRAs, you must calculate each account individually, but you can deduct the total amount in RMD from an IRA or combination of IRAs.
Ultimately, the key point is that, while the change in the starting age of the RMD will not affect a large part of the population, financial advisors are likely to have clients who are affected by the change and who benefit from the additional time in which Roth conversions can be executed. Most retirees won't be affected by the delay in the starting age of RMD (since most people can't afford to wait until the age when RMDs should start), but for those who do, strategically programmed Roth conversions can be an effective tool for accelerating revenues in a tax-efficient way, taking advantage of the additional time homeowners have of an IRA before your RMDs start, which will increase your annual income. .
