What: SECURE 2.0 includes a provision that reduces the penalty for failure to take an RMD from 50% to 25%.
Action Required:
Key Dates: Effective for taxable years beginning after 12/29/2022
Impacted Audiences: Participants with a 401(a) defined contributon plan, 401(a) defined benefit plan, 457(b) plan, or IRA (please note, other plan types not offered by MERS may be affected by this change)
For More Information: Click "Read More" below
Key Information:
Reduction in excise tax on RMDs
Reduces the penalty for failure to take an RMD from 50% to 25%. Further, if a failure to take an RMD from an IRA is corrected in a timely manner, as defined under SECURE 2.0, the excise tax on the failure is further reduced from 25% to 10%.
This change is effective for taxable years beginning after 12/29/2022 and reduces the penalty to participants when failing to take an RMD, thereby helping them preserve retirement savings longer.
More information: MERS SECURE 2.0 Resource Page