RMDs after SECURE Act 2.0

RMDs after SECURE Act 2.0 have fundamentally changed the retirement income planning landscape by raising the required minimum distribution starting age, reducing penalties for missed distributions, and creating extended planning windows that allow retirees to exercise significantly more control over their taxable income in the years immediately before mandatory withdrawals begin. For anyone currently approaching retirement, already in retirement, or managing inherited retirement accounts, understanding exactly how the new rules apply — and how to coordinate them with annuities, Roth conversions, Social Security timing, and Medicare premium management — is now a core competency in retirement financial planning. The decisions made in the years surrounding the RMD starting age can shape tax exposure, Medicare surcharges, and the sustainability of retirement assets for a decade or more. At Diversified Insurance Brokers, we help clients coordinate RMD timing with guaranteed income strategies so the new rules work as an advantage rather than a constraint. For a broader overview of all the changes in the legislation, our resource on the SECURE Act 2.0 covers the full framework. This page focuses specifically on how required minimum distributions now operate and how they interact with annuities, Medicare, and long-term tax planning.

New RMD Starting Ages: Who Is Affected and When

The most widely publicized change in SECURE Act 2.0 is the increase in the age at which required minimum distributions must begin. Before the original SECURE Act of 2019, the RMD starting age was 70½ — a threshold that had applied for decades. SECURE 1.0 raised that age to 72 for individuals born on or after July 1, 1949. SECURE Act 2.0, signed into law in December 2022, raised the starting age further in a two-step structure that creates different thresholds for different birth-year cohorts.

For individuals born between 1951 and 1959, the RMD starting age under SECURE 2.0 is 73. For individuals born in 1960 or later, the RMD starting age is 75 — though this higher threshold does not take practical effect until 2033, when the earliest members of the 1960 birth-year cohort reach age 73 under the prior rules and must wait until 75 under the new rules. The table below maps birth year to RMD starting age clearly, since the multi-law layering of these changes creates significant confusion about exactly which threshold applies to which individual.

RMD Starting Age by Birth Year Under SECURE Act 2.0

The first-year RMD has a special rule worth understanding: in the year the account owner reaches their RMD starting age, they have the option to delay taking that first RMD until April 1 of the following year rather than December 31. This extension is only available for the first RMD — all subsequent annual RMDs must be taken by December 31 of each year. Importantly, if someone uses the April 1 extension for their first RMD, they will take two full RMDs in that second year: the deferred first-year RMD by April 1 and the current-year RMD by December 31. Both are taxable in the same calendar year, which can produce a meaningful spike in taxable income. In most cases, taking the first RMD by December 31 of the starting year — rather than deferring to April 1 — avoids this double-distribution problem. Our dedicated resource on required minimum distributions covers the foundational mechanics of how RMDs work across the full account landscape.

How RMD Amounts Are Calculated

The annual required minimum distribution amount is calculated by dividing the prior year-end account balance by a distribution period factor from the IRS Uniform Lifetime Table — a life expectancy table that the IRS updates periodically and that all traditional IRA and most retirement account owners use for their RMD calculation. The Uniform Lifetime Table was updated effective January 1, 2022 to reflect longer life expectancies, which reduced the required annual distribution percentage at each age compared to the prior table. The practical effect is that retirees subject to the new table are required to distribute a smaller percentage of their account balance each year than they would have under the prior table.

The distribution factor for a 73-year-old under the current Uniform Lifetime Table is approximately 26.5, meaning an account owner turning 73 must distribute approximately 1/26.5 — roughly 3.77 percent — of their prior year-end IRA balance. At age 80, the factor drops to approximately 20.2 (about 4.95 percent). At age 90, the factor is approximately 12.2 (about 8.2 percent). As the distribution factor decreases each year, the percentage required to be distributed increases — which is why delaying voluntary withdrawals can allow IRA balances to grow larger and ultimately produce larger mandatory distributions than would have been required if the balance had been drawn down incrementally in earlier years.

For account owners whose sole beneficiary is a spouse who is more than 10 years younger, the IRS provides a more favorable distribution table — the Joint Life and Last Survivor Table — that produces lower annual RMDs by reflecting the longer combined life expectancy of the account owner and the younger spouse. This exception is automatic when the age gap and beneficiary relationship exist and can meaningfully reduce the annual RMD requirement for affected couples. For all other situations, including single account owners and accounts with non-spouse or younger beneficiaries, the Uniform Lifetime Table applies.

Which Accounts Are Subject to RMDs — and Which Are Not

Required minimum distributions apply to a broad range of tax-advantaged retirement accounts, not just traditional IRAs. The accounts subject to RMD rules include traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans (including both traditional and Roth 401(k) balances — though Roth 401(k) balances no longer require RMDs under SECURE 2.0), 403(b) plans, 457(b) government plans, and most other defined-contribution employer plans. If an individual holds multiple traditional IRAs, the total RMD is calculated across all IRA accounts combined, but the actual withdrawal can be taken from any one or any combination of those IRAs — the individual is not required to take a separate RMD from each IRA.

The most important account type that is generally exempt from the owner’s RMDs is the Roth IRA. Under current law, Roth IRA owners are not required to take any distributions during their lifetime. This makes Roth IRAs uniquely valuable as a long-term tax planning vehicle — the balance can grow indefinitely without mandatory distributions, and when distributions are eventually taken (by the owner or by beneficiaries), they may be received income-tax-free as qualified distributions. This Roth IRA exemption is one of the primary drivers of the Roth conversion strategy discussed later in this page. It is important to note that prior to SECURE 2.0, designated Roth accounts inside 401(k) plans were subject to RMDs, but SECURE 2.0 eliminated that requirement for plan years beginning after December 31, 2023 — aligning designated Roth 401(k) accounts with the Roth IRA’s RMD-exempt treatment.

Annuities held inside traditional IRAs are included in the IRA’s year-end balance for RMD calculation purposes. The annuity contract’s value — as reported by the carrier — is used as the prior year-end balance when computing the IRA’s annual RMD. Most annuity contracts designed for IRA use include RMD accommodation provisions that allow the required distribution to be taken without triggering surrender charges, but the specific contract language should be confirmed before purchase rather than assumed. Our resource on annuity free withdrawal rules covers how free withdrawal provisions interact with RMD requirements and what to verify before placing an annuity in an IRA.

Penalty Relief Under SECURE 2.0: Lower But Still Significant

Prior to SECURE 2.0, failing to take a required minimum distribution triggered a 50 percent excise tax on the amount not distributed — one of the harshest financial penalties in the entire tax code. SECURE 2.0 reduced that penalty to 25 percent of the undistributed amount, and further reduced it to 10 percent if the missed distribution is corrected within the IRS’s correction window (which is generally two years from the year of the missed distribution). These reductions represent genuine relief for retirees who made a mistake or experienced an administrative oversight.

The penalty reduction should not be interpreted as a reason to be casual about RMD compliance. A 25 percent excise tax on a missed distribution is still a severe financial consequence — and the income tax owed on the distribution itself is additive to the penalty. If a retiree misses a $20,000 RMD, the excise tax alone is $5,000, and the income tax on the $20,000 distribution (when eventually taken) may add another $4,000 to $7,000 depending on the marginal rate. Systematic planning — using a reliable annual reminder, coordinating with a financial institution that provides RMD calculations, or using annuity income to satisfy RMD amounts — is far preferable to relying on penalty reduction as a fallback. For annuity owners whose IRA includes a fixed or indexed annuity, understanding the free withdrawal and RMD accommodation provisions of the specific contract is essential planning infrastructure.

How Annuities Interact With RMDs

The relationship between annuities and required minimum distributions is nuanced and depends on both the account type (qualified vs. non-qualified) and the annuity’s payout structure (deferred accumulation vs. annuitized income). For the majority of annuity owners who hold fixed or indexed annuities in the accumulation phase inside a traditional IRA, the annuity is simply part of the IRA balance that generates the annual RMD calculation. The RMD must be taken, but the amount can come from any IRA account the owner holds — not necessarily from the annuity itself, as long as the total RMD amount is satisfied across the owner’s IRA portfolio.

For retirees who have annuitized a portion of their IRA — converting the annuity to a stream of guaranteed income payments — those ongoing payments typically satisfy the RMD for the annuitized portion of the IRA, provided the annuity’s payment structure meets the IRS’s minimum distribution standards for annuitized contracts. The IRS has specific rules governing how annuity payments from a qualified annuity must be structured to satisfy RMDs, including requirements about how the payment amount must be calculated and how it may change over time. Our resources on qualified annuity taxation and how annuities are taxed in retirement cover the tax framework that applies to both annuitized and non-annuitized IRA annuity distributions.

Guaranteed income from a deferred annuity with lifetime payout can be structured to align closely with or exceed projected RMD amounts, effectively making the annuity income a natural and automatic RMD satisfaction mechanism. This is one of the reasons some retirees choose to place a portion of their IRA in an income-focused annuity — the guaranteed monthly income provides predictable compliance with the annual distribution requirement without requiring annual manual calculation and withdrawal requests. When combined with other IRA holdings, the annuity income can provide the foundation of the RMD structure while leaving remaining IRA balances available for strategic management. A fixed annuity ladder strategy can complement this approach by creating staggered maturity dates across multiple fixed annuity contracts, providing predictable liquidity and growth coordination over the multi-year RMD horizon.

QLACs: Deferring RMDs With a Qualified Longevity Annuity Contract

SECURE 2.0 also expanded the rules for Qualified Longevity Annuity Contracts — QLACs — in ways that make them a more accessible and valuable tool for RMD management. A QLAC is a deferred income annuity purchased with IRA or employer plan funds that is specifically structured under IRS rules to defer income to an advanced age (typically 80 or 85) while being excluded from the RMD calculation until payments begin. Under the pre-SECURE 2.0 rules, the maximum amount that could be placed in a QLAC was the lesser of 25 percent of the IRA balance or $135,000. SECURE 2.0 removed the percentage limit and increased the dollar cap to $200,000, indexed for inflation going forward.

The QLAC creates a meaningful two-benefit structure for retirees concerned about longevity risk and RMD-driven tax spikes. First, by removing the QLAC balance from the RMD calculation, it reduces the annual mandatory distribution from the remaining IRA balance — which reduces taxable income in the years before QLAC payments begin. Second, by locking in guaranteed income that begins at a specified advanced age, the QLAC addresses the financial risk of outliving assets in the late retirement years when other sources may have been partially depleted. For retirees who hold large IRA balances relative to their anticipated spending needs, a QLAC can simultaneously reduce near-term RMD-driven taxable income and create certainty about late-retirement cash flow. Our resource on inflation-protected income annuities covers broader inflation-management strategies that complement QLAC-based longevity protection.

Inherited IRA RMD Rules After SECURE 2.0

The inherited IRA rules are among the most complex and most consequential changes in both SECURE 1.0 and SECURE 2.0, and they affect any retirement account that passes to a non-spouse beneficiary. Understanding how inherited IRA RMDs work after SECURE 2.0 is important for both current IRA owners planning their estate and beneficiaries who have received or expect to receive inherited retirement assets.

Under the rules established by SECURE 1.0 and clarified by SECURE 2.0 and subsequent IRS guidance, most non-spouse beneficiaries who inherit an IRA or qualified retirement account from an owner who died on or after January 1, 2020 are subject to the 10-year rule. This rule requires the entire inherited IRA balance to be distributed by the end of the 10th year following the year of the original owner’s death. There is no annual RMD requirement for the first nine years — the beneficiary can choose to take distributions in any amount, at any time, during the 10-year period, as long as the account is fully distributed by the end of year 10.

However, IRS guidance subsequently clarified that if the original account owner had already reached their RMD starting age (the “required beginning date” in IRS terminology) at the time of death, non-spouse beneficiaries may also be required to take annual RMDs in years 1 through 9 of the 10-year period, in addition to emptying the account by the end of year 10. This annual RMD requirement during the 10-year period only applies when the original owner died on or after their required beginning date. If the original owner died before reaching their RMD starting age, beneficiaries are only subject to the 10-year total emptying requirement without annual RMDs. Our resources on whether inheritance affects RMDs, how inherited IRAs work, and what a non-spousal inherited IRA is cover the inherited IRA framework in full detail. For beneficiaries considering placing inherited IRA assets in an annuity, our resource on how to transfer an inherited IRA to an annuity covers that specific planning option.

Eligible designated beneficiaries — a category that includes surviving spouses, minor children of the account owner (until they reach majority), disabled individuals, chronically ill individuals, and beneficiaries not more than 10 years younger than the account owner — are exempt from the 10-year rule and may stretch distributions over their own life expectancy. Surviving spouses have the additional option to treat an inherited IRA as their own, resetting the RMD starting age based on their own birth year rather than being subject to the inherited IRA rules at all.

RMDs and Medicare: The IRMAA Surcharge Connection

Every dollar withdrawn from a traditional IRA increases adjusted gross income — and that increase in AGI has consequences that extend far beyond the federal income tax rate applied to the distribution. Medicare Part B and Part D premiums are subject to Income-Related Monthly Adjustment Amounts (IRMAA), which impose surcharges on higher-income beneficiaries. Medicare premium surcharges are calculated based on modified adjusted gross income from two years prior, which means a large IRA distribution in the current year affects Medicare premiums for the two subsequent years.

The IRMAA surcharge thresholds create a meaningful incentive to manage IRA distributions carefully — not just for the immediate tax impact, but for the two-year premium impact that follows any income spike. A retiree who takes a large IRA distribution one year — whether as a voluntary withdrawal, an RMD, or a Roth conversion — may find that their Medicare Part B premium increases by several hundred dollars per month for each of the following two years, creating a cost that significantly exceeds what a simple marginal tax rate calculation would suggest. Our resource on IRMAA planning strategies covers the specific income thresholds and bracket management approaches that help retirees avoid unintentional Medicare surcharges. Our resource on whether Social Security is taxable covers the parallel threshold system for Social Security benefit taxation, which interacts with IRA distributions in a way that requires coordinated income management for optimal results.

The extended planning windows created by SECURE 2.0’s later RMD starting ages make Medicare-sensitive income management more achievable. A retiree who retires at 65 but is not required to begin RMDs until 73 has eight years to manage IRA withdrawals strategically — taking selective distributions that stay within preferred IRMAA brackets rather than being forced into potentially larger distributions by an earlier mandatory start date. The coordination of guaranteed annuity income with strategic IRA withdrawals during this window is one of the most impactful retirement income planning opportunities available today. Our resource on how Social Security and annuities work together covers the income-coordination framework that most effectively combines these sources.

The Gap Years: Strategic Planning Between Retirement and RMD Start

The extended window between retirement (often in the early to mid-60s for many retirees) and the new RMD starting age of 73 or 75 represents one of the most significant financial planning opportunities created by SECURE 2.0. During this gap period, IRA distributions are voluntary rather than mandatory, which means retirees have control over both the amount and the timing of taxable income from their retirement accounts. This control creates multiple strategic opportunities that did not exist under prior law’s earlier mandatory start dates.

The first strategic opportunity is proactive IRA drawdown to reduce future RMD amounts. By taking voluntary distributions from traditional IRA accounts during lower-income years in the gap period — years when AGI is likely lower than it will be when RMDs, Social Security, and other income sources combine — retirees can reduce the account balance that will be subject to mandatory distributions later. Smaller future balances mean smaller future RMDs, which means smaller future taxable income spikes and smaller future Medicare surcharge exposures. This proactive drawdown strategy requires careful modeling to confirm that the tax paid on today’s distributions is lower than the tax that would otherwise be paid on larger mandatory distributions later.

The second strategic opportunity is Roth conversion during the gap years — converting traditional IRA balances to Roth IRA status while in a lower income tax bracket, paying the conversion tax today and creating a Roth balance that will never be subject to RMDs and will provide tax-free qualified distributions in the future. For retirees who have significant traditional IRA balances, a multi-year Roth conversion strategy during the gap period can meaningfully reduce lifetime tax liability, reduce future RMDs, and create a Roth reserve that provides tax flexibility in later retirement when medical expenses and care costs may create significant spending needs. Our resources on Roth conversions, Roth conversion windows explained, Roth conversions using a bonus annuity, and Roth conversions with a fixed indexed annuity cover how annuity-funded and annuity-complemented Roth conversion strategies work in practice.

How Annuity Income Can Stabilize the RMD-Driven Tax Picture

Guaranteed annuity income, when properly coordinated with a retiree’s RMD schedule and overall income picture, can serve as a tax-smoothing mechanism that reduces the volatility in taxable income that mandatory distributions alone would otherwise create. Without coordination, RMDs generate income that fluctuates each year as the account balance changes and the distribution factor decreases — sometimes producing income spikes in favorable market years and lower distributions following market downturns. Annuity income, by contrast, is contractually defined and constant or predictably structured regardless of market conditions.

When a portion of IRA assets is deployed into a lifetime income annuity, the guaranteed income from the annuity provides a stable foundation for the year’s total taxable income, and the remaining IRA balance (which is smaller because a portion has been annuitized) generates a smaller annual RMD. The combined income from annuity payments and the smaller RMD may be more predictable and more manageable from a bracket perspective than a larger RMD from a fully unannuitized IRA balance. The annuity beneficiary and death benefit provisions affect how the annuitized portion interacts with estate planning, and our resource on fixed indexed annuity pros and cons covers the broader FIA-based income planning framework that applies when using a fixed indexed annuity with an income rider rather than an immediate annuity for this coordination purpose.