A few years ago, the Required Minimum Distribution (RMD) rule changed from requiring distributions at the age of 70-1/2 to 72 years. Life expectancies are increasing (sans Covid) and the Consolidated Appropriations Act of 2023 has extended the starting age for RMDs to the age of 73 for those who turn 72 after December 31, 2022. If you turn 72 in 2023, you can now delay the withdrawal until the tax year for 2024.
Looking to the future, if someone turns 74 in years 2033 or later, the beginning withdrawal age goes to 75 years.
But, do not despair and think that you must wait to withdraw from your retirement assets. Once you reach 59-1/2 years, there is no penalty/surcharge for early withdrawal and these assets are available to you.
Remember that prior laws have changed the time one has to withdraw from retirement-type assets they receive as a beneficiary to a maximum of ten (10) years, with a few exceptions. These withdrawal requirements are separate from a retirement asset you own and have access to during your lifetime.
It is likely that any withdrawals, whether from your own retirement assets or from retirement assets you inherited, will be subject to income tax (except for Roth IRAs) and you will need to provide for the additional income being reported on your income tax returns so that you will not be subject to underpayment penalties and/or interest, which can add up quickly.
If you need assistance with the decision of when and how to receive your RMDs, speak with your financial advisor or the plan administrator/financial institution. Don’t think that the distributions will automatically begin when you reach the “magic” age, for there will always be paperwork to be completed!