Secure Act 2.0 – Tax Planning Opportunities Related to Delayed Required Minimum Distribution Requirements

February 9, 2023 By: Jackie Goldstick, CFP® and Taylor Rigler, CFP®

Those who reach age 72 in 2023 or beyond now have more time to opportunistically take distributions from their tax-deferred accounts in efforts to minimize their tax liability over their retirement years. 1 For those who will turn 72 in 2023-2031, RMDs must begin at age 73; for those who turn 72 in 2032 or later, Required Minimum Distribution are not required until age 75.

Here are some important items to consider:

The amount of an individual’s RMD is based on the value of the account at the prior year-end and the age of the individual at the end of the current calendar year. With the RMD start date being delayed, funds within a tax-deferred account will be able to continue to grow on a tax-deferred basis for longer.
There is now a longer “window of opportunity” between when an individual retires and transitions from earning normal working income to generating income from assets, tax-deferred account withdrawals, pensions and social security. It is during this window that retirees can opportunistically recognize income through either tax-deferred account withdrawals or ROTH conversions so as to (1) reduce the size of the tax-deferred account that will eventually be subject to RMD requirements (and hence, reduce the potential RMD amount) and (2) manage their overall tax liability over the retirement years by seeking to stay within certain tax bracket thresholds.
When determining how much taxable income to recognize in a given year, consideration also needs to be given to Modified Adjusted Gross Income levels as recognizing additional income may impact Medicare premiums.

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1 For those who reached age 72 prior to 1/1/2023, Secure Act 2.0 did NOT impact RMD requirements.

Core Wealth Management is a fee-only wealth management firm located in Jupiter, FL. Our CFP® professionals provide investment management, financial planning and advisory services, while always strictly abiding by the highest fiduciary standards. For more information, contact us today at 561-491-0231.

Jackie Goldstick, CFP® is the Principal and Director of Financial Planning at Core Wealth Management. She is a member of the National Association of Personal Financial Advisors (NAPFA) as well as the Financial Planning Association (FPA).

The material provided is for informational purposes only and should not be construed as financial, legal, or tax advice. All investments carry risks, including the loss of principal, and we encourage you to consult a qualified professional for personalized guidance. Click here to view our entire blog disclosure.

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