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The IRS’ recently released proposed regulations on how to handle required minimum distributions under the Setting Every Community Up for Retirement Enhancement (Secure) Act of 2019 are effective now.
While the IRS’ recently released regs “are called ‘proposed’ regulations, they are not like proposed tax laws which are not effective until signed into law,” Ed Slott of Ed Slott & Co. told ThinkAdvisor in a recent email.
A sweeping retirement bill, the Securing a Strong Retirement Act of 2022, or Secure Act 2.0, that passed the House late Tuesday increases the required minimum distribution age from 72 to 75 in stages — over 11 years — and reduces the 50% penalty for missing an RMD, Ed Slott of Ed Slott & Co. told ThinkAdvisor on Wednesday.
If you dread tax day every year, here’s a bit of good news: Your tax burden probably will lighten when you retire.
You’ll still pay taxes on income you receive from sources that haven’t been taxed yet, such as 401(k) and individual retirement accounts or a defined benefit pension. Your Social Security benefits also may be taxed, depending on your income. And higher-income seniors pay surcharges on Medicare premiums that, while not technically taxes, certainly feel like it to retirees.
It used to be that Americans with tax-favored retirement plans focused mainly on how to get money into them. Now, savers are more and more concerned with when and how much must be withdrawn—including at death or after.
