This week’s theme on the Retirement Quick Tips Podcast is: SECURE 2.0 Act & The BIG Changes You Need To Know

Today, I’m talking about how you can take advantage of the increasing RMD age to 73 this year, and age 75 in 2033. If you missed yesterday, I explained this important change in detail, so go back and have a listen to episode 1578 for a detailed explainer on this change. 

Moving on to the planning implications and some things to consider with this new change: 

1. Pushing back the RMDs is always welcome news, because it provides more flexibility. You may still end up withdrawing money from your IRA, 401k or other retirement accounts before you reach your RMD age, but the nice thing is you won’t be mandated to withdraw a certain percentage of your account until age 73 or 75, depending on when you were born, and that added flexibility potentially keeps your taxes lower for longer in retirement. This has a ripple effect on your retirement planning, since putting off retirement-account income for a few more years, can also reduce your Medicare Part B/D premiums. That’s because every dollar you withdraw from your retirement accounts counts as income, and this income is what’s used to calculate your Medicare premiums with higher earning households paying higher incomes. 

2. Another important financial planning implication of the pushback in RMD age is that you will now have a few more years of potentially tax-efficient Roth conversions

   1. Explain - income lower in retirement, so it’s an ideal time to consider Roth conversions. Now you have anywhere from 1-3 more years to make those Roth conversions than you previously did, without RMDs increasing your income in conversion years and complicating the decision. 

In addition, the penalty for failing to take an RMD will decrease to 25% of the RMD amount, from 50% currently, and 10% if corrected in a timely manner for IRAs. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast.    

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