More Security from the Secure Act 2.0
At What Age Does the Government Require the RMD?
The chart below gives you the age when you have to start taking RMDs:
| Your Birth Year | Your Mandatory RMD Age |
| 1950 or earlier | 72 (70.5 for those who turned 70.5 before 2020) |
| 1951-1959 | 73 |
| 1960 or later | 75 |
When Do I Have to Take My Taxable RMD?
Your first RMD. For your first RMD, the deadline is April 1 of the year following the year you reach RMD age.
For example, if you turn 73 in 2024, you have until April 1, 2025, to take your first taxable RMD.
Annual RMDs. For each year after you reach RMD age, you have to take an annual RMD on or before December 31.
Example. You reach age 73 in 2023. You need to take your first taxable RMD on or before April 1, 2024. You also need to take your annual RMD on or before December 31, 2024.
Key point. Taking two RMDs in one year could put you into a higher tax bracket and even result in a substantial increase in your Medicare premiums. In such cases, you would want to take the first RMD in the year you reach RMD age (2023 in the example above).
Thankfully—RMD Failure Penalties Decline
The IRS can impose an “excess accumulation” penalty tax if you fail to take your RMD at all or fail to take your full RMD by the deadline. Until now, the penalty tax was a whopping 50 percent of the RMD shortfall—one of the harshest penalties in the tax law.
Example. In 2022, your RMD was $50,000, and you took only $20,000 by the deadline. The IRS could impose a $15,000 penalty (50 percent of the $30,000 shortfall).
Starting in 2023, the SECURE 2.0 Act reduces the penalty for RMD shortfalls to 25 percent.4
And even better, you can correct the shortfall within a “correction window” and reduce that penalty to 10 percent. The correction window begins on the date the tax penalty is imposed (generally January 1 of the year following the RMD shortfall) and ends on the earlier of
when the IRS mails a Notice of Deficiency to the taxpayer,
when the penalty tax is assessed by the IRS, or
the last day of the second tax year after the penalty tax is imposed.
For example, if you fail to take an RMD due in 2022, unless the IRS mails a Notice of Deficiency or assesses the penalty tax sooner, you have until December 31, 2024, to make the required withdrawal and qualify for the lower 10 percent penalty.
These penalty reductions make RMD shortfalls much less scary for taxpayers. But even a 10 percent penalty can be substantial. You can ask the IRS to waive the penalty entirely if the shortfall was due to reasonable error and you took reasonable steps to remedy it.6
To request a penalty waiver, file IRS Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. Attach a letter with the form explaining the reasonable error. You can file Form 5329 with your income tax return for the year or by itself.
Before filing the penalty waiver request, you should make a catch-up distribution from your retirement accounts to make up for the RMD shortfall.