YOU MAY GET MORE TIME TO TAP RETIREMENT ACCOUNTS

But delaying required minimum distributions isn’t always a good idea.

- SANDRA BLOCK

LEGISLATION THAT HAS widespread support in Congress would give retirees more time before they must start withdrawing money from their traditional IRAs and other tax-deferred retirement plans, pushing back the age to take required minimum distributions to 75 over the next decade. The Securing a Strong Retirement Act of 2021, nicknamed “SECURE Act 2.0,” would change the age for taking RMDs from 72 to 73 on January 1, 2022, and gradually increase the RMD age to 75 by 2032 (see the table at right). RMDs are based on the total amount of money you have in IRAs and other tax-deferred accounts at the end of the year, divided by a factor from IRS life-expectancy tables. That isn’t a problem for retirees who withdraw the equivalent of their RMD (or more) to pay expenses. But RMDs can be troublesome for retirees who have large account balances and other sources of income, such as a pension or a job. With drawals are taxed at the individual’s regular income tax rate, and more taxable income can lead to other costs, such as additional taxes on Social Security benefits and higher Medicare premiums.