RMD Age Just Went Up—Here’s What It Means for Your Retirement Plan
Required Minimum Distributions (RMDs) have been around for nearly 40 years. They originated from the Tax Reform Act of 1986 and initially kicked in at age 70½. The core concept is pretty straightforward: when you contribute to a pre-tax retirement account, you receive a tax deduction up front. In exchange, the IRS expects to collect taxes on the back end. RMDs are the government’s way of ensuring that income eventually gets taxed.
Before the rule existed, many individuals—especially those who didn’t need the money—simply let their retirement accounts sit untouched. As a result, the IRS wasn’t getting paid. That’s what led to the creation of the RMD rule, which mandates that account holders begin withdrawing (and paying taxes on) a minimum amount each year once they hit a certain age.
The RMD amount is determined by three main factors:
The account holder’s age
The account balance as of December 31st of the previous year
The IRS’s published life-expectancy tables
The calculation is simple:
Year-End Balance ÷ IRS Life Expectancy Factor = RMD Amount
So, the higher your balance or the older you are, the larger your RMD.
Fortunately, most custodians (like Schwab or Fidelity) now calculate your RMD automatically. That said, the RMD starting age is what has changed the most—and that’s where SECURE Act 2.0 comes in.
A Brief History of the RMD Age
For over three decades, the starting age was 70½. Then in 2019, the original SECURE Act raised it to 72 starting in 2020. Now, with SECURE Act 2.0, the rules have shifted again—and they’ve gotten a bit more complicated.
Here’s a simple guide based on your birth year:
Birth Year RMDs Begin At
1950 or earlier 72 or 70½ (if you reached 70½ before 2020)
1951 – 1959 73
1960 or later 75
So, in 2023, there are no “new” RMDs:
If you turn 73 in 2023, your first RMD was already triggered in 2022 under the old rules.
If you turn 72 in 2023, you won’t be required to start withdrawing until 2024.
Why these specific ages and years were chosen is anyone’s guess, but as planners, our job is to interpret the rules and find the planning opportunities. And yes—there are some.
The Good News
More Time for Roth Conversions
A Roth Conversion is when you move money from a pre-tax IRA to a Roth IRA. You pay tax on the converted amount now, but it grows and can be withdrawn tax-free later.
This strategy achieves two things:
It builds up your Roth bucket
It reduces your future RMDs (since Roth IRAs aren’t subject to them)
By pushing the RMD age back, retirees have a wider window to complete strategic Roth conversions. This can lead to long-term tax savings—especially for those who retire in their 60s.
Example:
Let’s say Emily retires at age 65. Under the old rule, she would’ve had until age 72 to complete Roth conversions before her RMDs began. Now, with SECURE Act 2.0, Emily’s window has been extended to either age 73 or 75 depending on her birth year. That gives her 1 to 3 more years of proactive tax planning.
Potentially Lower Medicare Premiums
Medicare Part B and D premiums are based on your income from two years prior. The more income you show (including RMDs), the higher your premiums—thanks to something called IRMAA (Income-Related Monthly Adjustment Amount).
By delaying RMDs, some retirees may be able to avoid crossing into a higher IRMAA bracket for a few extra years.
Example:
Emily, age 71 (born in 1951), currently has income just below the IRMAA threshold. Under the old rule, she would have started RMDs at age 72—likely pushing her over the threshold and resulting in surcharges at age 74.
With the new rule, her first RMD is delayed until age 73. That extra year gives her more breathing room and could save her hundreds—if not thousands—of dollars in Medicare surcharges.
The Bad News
Bigger RMDs Later
The downside of delaying RMDs is that the required amount often increases. That’s because RMD calculations are based on life expectancy—and the older you are, the shorter your IRS-determined life expectancy.
Shorter life expectancy = bigger withdrawal requirement.
Example:
Emily’s RMD at age 70½ would have been smaller than her RMD at 72. And that would still be smaller than the RMD she now faces at 73 or 75. If her portfolio has grown in the meantime, that required distribution only gets larger—potentially pushing her into a higher tax bracket.
Since RMDs are taxed as ordinary income, bigger withdrawals often translate to bigger tax bills. That’s why it’s so important to plan proactively during the window between retirement and your first RMD.
Final Thoughts
The RMD age shifting again can feel confusing. But if you’re proactive, this change actually creates more planning flexibility—not less.
It opens the door to:
Potentially lowering your future tax burden through Roth conversions
Potentially avoiding Medicare surcharges
Having more control over how and when you take distributions
I help working professionals take control of their finances so they can reduce stress, focus on what matters most, and live their most fulfilling life. As always, it’s not just about what you make—it’s about what you keep. And with the right strategy, you can keep more in your pocket and less in Uncle Sam’s.
