IRA, 401(K) Required Withdrawal Age to Change Again

New proposed retirement legislation is set to change the minimum age for required minimum distributions (RMDs) to 75 by 2032, CNBC reports.

The last few years have seen multiple increases of the minimum withdrawal age, which was set at 70½ years as recently as 2019 before being increased to 72, which is the current minimum.

RMDs are calculated by dividing the balance of an IRA (here are the best ones) or retirement plan by the life expectancy factor determined by the IRS. The amount is paid yearly and serves as a safeguard against tax avoidance by individuals with retirement accounts.

Two different bills are proposing the new legislation—a House and a Senate bill. The House bill proposes a gradual increase, starting from age 73 in 2022, raised to 74 in 2029, and finally 75 by 2032. The Senate bill simply plans to raise the RMD minimum age to 75 by 2032.

An additional perk of the new bill would be a reduction in the penalty in the case of failure to take out one’s RMD; the penalty would be decreased by half from the current 50% to 25%. Furthermore, those with less than $100,000 in aggregate retirement savings would have their RMDs waived.

Most Retirees to Remain Unaffected

The change in legislation isn’t expected to affect many retirees. Most of them (around 79.5%) withdraw more than their RMD as the minimum isn’t enough to satisfy their financial needs.

However, the remaining 20.5% can benefit from this as they will get more financial planning flexibility for their retirement and make better investing choices for maximum yield.

Many financial advisors advocate for the push of RMDs as it allows their clients to make wiser financial choices about their retirement funds. Those who don’t need the RMD can use the delay to explore other financial opportunities, such as converting to a Roth IRA for future tax-free withdrawals or seeking help from automated services, such as some of the top robo advisors.


My eyes rarely take a break from staring at my laptop's screen—I am Big Brother, scanning the web for news and information worth sharing. Full transparency—a substantial chunk of my screentime is also dedicated to watching TV shows, but balance is key, right? Writing is how I choose to share my findings with the world while keeping my love of language and creativity alive.

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