Required Minimum Distributions and The Secure Act

There is continuing confusion on how RMDs are treated since The Secure Act became law.

If you turned 70 1/2 years old in 2019, you are still subject to the old law and required to begin RMDs.  If you turn 70 1/2 in 2020, you do not need to take RMDs until you turn 72 years old.  If you have been doing RMDs, you need to continue.  Always use the IRS worksheet.  If you receive an RMD notice from your broker/dealer or retirement account custodian or trustee and you did not turn 70 1/2 years old in 2019 or have not been taking RMDs but you will be 70 1/2 in 2020, you should probably ignore it.  The IRS has issued Guidance here.  You should never just accept  an RMD notice with a calculated amount from a retirement custodian or trustee or broker/dealer; you should always
use the IRS worksheet.

You must calculate the RMD for each IRA, although  you can take the total RMD from just one IRA if you so desire.  You must calculate the RMD for each 401(k), 403(b), 457 separately and take the RMD separately from each.  This is another reason to rollover 401(k), 403(b), and 457 plans into a Rollover IRA.

While it is not prudent to have an annuity within a IRA account, because they are an expensive "investment" and it makes little sense to have a qualified annuity in a qualified account, it will be subject to the IRA RMD calculation.  A non-qualified annuity is funded by after tax money and any distribution is taxable to the extent the distribution contains a share of gain over the after tax funding.

FINRA has released an Alert on this subject.


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