On December 29, 2022, the SECURE 2.0 Act of 2022 became law as part of the Consolidated Appropriations Act of 2023 (see p. 817 for SECURE 2.0), ushering in another round of retirement reforms, some of which go into effect immediately, and some of which have an effective date of some point in the future.
Required Minimum Distributions (RMDs)
The most discussed provision is the change to the age requirements for the Required Minimum Distributions (RMDs). As you may recall, the RMD age was changed from 70 ½ to 72 in 2019 by the SECURE Act.
Under the current law, if the account owner turned 72 in 2022, they were required to take an RMD in 2022 by April 1, 2023. However, if the account owner turns 72 in 2023, they are not required to take an RMD in 2023, as the RMD age has been increased to 73, effective January 1, 2023. Those who turn 73 in 2023 will have taken their first RMD in 2022, when they turned 72, so this change should really affect those turning 72 in 2023.
For those turning 72 in 2023, no RMD will be required in 2023. Next year, when they turn 73 in 2024, they’ll be required to take their first RMD by April 1, 2025, as a person’s first RMD is not required to be taken until April 1 of the year after they reach the required age.
It is important to note that if a person reached 73 in 2024 their first RMD would need to be taken by April 1, 2025 (for tax year 2024) and they’d also need to take a second RMD by December 31, 2025 (for tax year 2025). The RMD age is increasing again in ten years from 73 to 75, effective January 1, 2033.
Another change effective January 1, 2023 for Required Minimum Distributions is the penalty for NOT taking an RMD is decreasing from 50% of the RMD amount to 25% of the RMD amount or 10% of the RMD amount if corrected within the allowed correction window.
| Secure Act – 2019 & Secure 2.0 Act – 2022 | Age at which RMD is required |
| 2019 | 70 ½ |
| 2020 | 72 |
| 2021 | 72 |
| 2022 | 72 |
| 2023-2032 | 73 |
| 2033- | 75 |
Catch Up Limits
Another provision we’ve been getting questions about is the selective increase in catch-up limits. Effective January 1, 2025, the SECURE Act increases these limits to the greater of $10,000 or 50% more than the regular catch-up amount in 2025 for individuals who have attained ages 60, 61, 62 and 63. The current catch-up limits for those 50 or older is $7,500 for employer plans and $3,500 for SIMPLE plans.
In total the SECURE 2.0 Act portion of the Consolidated Appropriations Act is about 130 pages long and contains nearly 100 provisions which enact some sort of change or another. Not all the changes made by the SECURE 2.0 Act will be relevant for every financial institution, but the change to the Required Minimum Distributions will certainly have widespread effects on retirement accounts held by financial institutions.