6.1 SECURE 2.0 RMD Age Milestones (73 and 75), Required Beginning Date (RBD), and Deadlines

Legislative Evolution of the Lifetime RMD Starting Age

For nearly four decades following the enactment of the Employee Retirement Income Security Act of 1974 (ERISA), the statutory starting age for Required Minimum Distributions (RMDs) was fixed at age 70½. Under pre-2020 rules codified in Internal Revenue Code (IRC) Section 401(a)(9), an individual attained age 70½ on the calendar date exactly six months after their 70th birthday. If an individual reached age 70½ on or before December 31, 2019 (meaning they were born on or before June 30, 1949), they remained permanently bound to the legacy age 70½ rules, with their initial Required Beginning Date (RBD) occurring on April 1 of the calendar year following the year they attained age 70½.

Recognizing increases in American life expectancy and longer workforce participation, Congress enacted two landmark legislative overhauls that systematically postponed mandatory lifetime distributions:

1. The SECURE Act of 2019 (SECURE 1.0): Effective January 1, 2020, Section 114 of the Setting Every Community Up for Retirement Enhancement Act replaced age 70½ with age 72 for any individual who reached age 70½ on or after January 1, 2020. This statutory tier applied to account owners born between July 1, 1949 and December 31, 1950. Individuals who had already attained age 70½ by December 31, 2019 were grandfathered under the prior law and could not pause their ongoing annual RMDs.
2. The SECURE 2.0 Act of 2022: Enacted on December 29, 2022 as Division T of the Consolidated Appropriations Act of 2023, Section 107 of SECURE 2.0 amended IRC Section 401(a)(9)(C) to establish a phased, two-tiered expansion of the RMD starting age:
   • Age 73: Applies to individuals who attain age 72 after December 31, 2022 and attain age 73 before January 1, 2033. In practice, this encompasses individuals born from January 1, 1951 through December 31, 1959.
   • Age 75: Applies to individuals who attain age 74 after December 31, 2032, covering all individuals born on or after January 1, 1960.

The 1959 Birth Cohort Drafting Quirk

As enacted, Section 107 of SECURE 2.0 contained an inadvertent statutory drafting overlap regarding individuals born in 1959. Under a strict literal reading of the statutory text, an individual born in 1959 attains age 72 in 2031 (making age 73 apply in 2032) while simultaneously attaining age 74 in 2033 (making age 75 apply in 2034). The July 2024 final RMD regulations (Treasury Decision 10001) reserved the paragraph for the 1959 cohort, and proposed regulations issued the same day (REG-103529-23) would set the applicable age at 73 for anyone born in 1959, making 2032 the first distribution calendar year and April 1, 2033 the Required Beginning Date. In Announcement 2026-7 (February 2026), Treasury and the IRS said further final RMD rules are coming; in practice, the industry applies age 73 to the 1959 cohort. Individuals born on or after January 1, 1960 move to the age 75 milestone, with their first distribution calendar year arriving no earlier than 2035.

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Comprehensive Birthdate Cohort Analysis

IRA custodians and CISP professionals must determine an account owner's exact statutory milestones by cross-referencing their date of birth against the governing legislative framework:

Example: An account owner born on October 14, 1952 turns 73 on October 14, 2025. Her first distribution calendar year is 2025. Her Required Beginning Date is April 1, 2026. For her peer born on February 4, 1960, he will turn 73 in 2033 and 75 in 2035. Under SECURE 2.0, his RMD age is 75; his first distribution calendar year is 2035, and his Required Beginning Date is April 1, 2036.

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The Required Beginning Date (RBD) Framework (IRC § 401(a)(9)(C))

The statutory threshold that triggers mandatory distributions from an IRA is the Required Beginning Date (RBD). Under IRC Section 401(a)(9)(C)(i), for an Individual Retirement Arrangement, the RBD is defined as:

April 1 of the calendar year following the calendar year in which the account owner attains the applicable RMD age.

If a Traditional IRA owner reaches age 73 in calendar year 2025, their statutory RBD is April 1, 2026. Although the account owner is legally entitled to wait until April 1, 2026 to take their first RMD, the distribution itself is deemed to be "on account of" the 2025 distribution calendar year.

The Absence of the "Still Working" Exception in IRAs

A critical technical distinction tested heavily on the CISP examination involves the statutory difference between employer-sponsored qualified retirement plans and IRAs:

• Employer Qualified Plans (IRC § 401(a)(9)(C)(ii)): In a qualified employer plan—such as a 401(k), 403(b), or defined benefit pension—an active employee who owns 5% or less of the employer entity may postpone their Required Beginning Date until April 1 of the calendar year following the year in which they terminate employment or retire, even if they work well past age 73 or 75. This rule is universally known as the "still working" exception.
• Traditional, SEP, and SIMPLE IRAs (IRC § 408(a)(6)): Treasury Regulation Section 1.408-8 explicitly establishes that the "still working" exception does not apply to IRAs. Whether an IRA owner is retired, semi-retired, or working 80 hours a week as a corporate executive, business owner, or bank employee, they must take their required minimum distribution by April 1 following the year they reach the applicable statutory age. Active employment provides zero relief from IRA RMD mandates.

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The "Double RMD" Phenomenon and Tax Timing Strategies

While IRC Section 401(a)(9)(C) provides a grace period permitting IRA owners to delay their first distribution until April 1 of the following year, exercising this deferral option carries a significant tax trap known as the double RMD phenomenon.

Annual Deadlines and Bunching Mechanics

The RMD rule requires an annual distribution for every distribution calendar year. For an owner turning 73 in 2025:

• First Distribution Year (2025): Deadline is April 1, 2026 (the RBD).
• Second Distribution Year (2026): Deadline is December 31, 2026.

If the owner elects to delay their 2025 RMD until the statutory deadline of April 1, 2026, they must take two complete RMDs in calendar year 2026: the 2025 RMD by April 1, 2026, and the 2026 RMD by December 31, 2026.

Adverse Tax Consequences of Income Bunching

Receiving two large taxable retirement distributions within the same 12-month tax window artificially inflates the account owner's Adjusted Gross Income (AGI) and taxable income, triggering severe cascading tax effects:

1. Marginal Rate Escalation: The concentrated distribution can push the taxpayer into significantly higher federal and state income tax brackets (e.g., escalating from the 22% bracket into the 32% or 35% bracket).
2. Medicare IRMAA Premium Surcharges: The Medicare Income-Related Monthly Adjustment Amount (IRMAA) imposes steep monthly premium surcharges on Medicare Part B (medical insurance) and Part D (prescription drug coverage) for individuals whose Modified Adjusted Gross Income (MAGI) exceeds statutory tiers. Because IRMAA uses a two-year lookback period, a double RMD in 2026 directly inflates Medicare premium costs throughout 2028.
3. Taxation of Social Security Benefits: Under IRC Section 86, provisional income calculations quickly reach the statutory threshold where 85% of Social Security retirement benefits become fully subject to federal income taxation.
4. Phaseout of Deductions and Credits: Elevated AGI limits itemized deductions, phases out certain nonrefundable credits, and restricts medical expense deductions subject to the 7.5% AGI floor.

Bank Operational Counseling: December 31 vs. April 1

To prevent unintentional tax bunching, bank IRA specialists must counsel account owners approaching their RBD on distribution timing. Distributing the first RMD on or before December 31 of the attainment year (e.g., taking the 2025 RMD in late 2025) levels taxable income evenly across both tax years, avoiding unnecessary bracket spikes and IRMAA penalties.

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Subsequent Annual Deadlines (December 31)

Following the first distribution calendar year, the statutory deadline for every subsequent distribution year is strictly December 31 of that calendar year. There is no second-year grace period or administrative rollover into the subsequent year.

If an owner turns 73 in 2025 and satisfies their 2025 RMD on November 15, 2025, their 2026 RMD must be fully distributed on or before December 31, 2026. The 2027 RMD must be distributed by December 31, 2027, continuing annually for the remainder of the owner's life.

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Complete Exemption of Roth IRAs from Lifetime RMDs (IRC § 408A(c)(5))

A foundational rule of retirement planning is the complete exemption of Roth IRAs from lifetime distribution mandates. Under IRC Section 408A(c)(5):

The minimum distribution rules of Section 401(a)(9)(A) (relating to lifetime distributions) do not apply to Roth IRAs.

An original Roth IRA owner is never required to take a single dollar of distributions during their lifetime, regardless of whether they attain age 73, 75, 85, or 100. The entire balance remains invested in a tax-sheltered vehicle, compounding completely income-tax-free under IRC Section 408A(d).

Post-Death vs. Lifetime Rules

CISP candidates must not confuse lifetime rules with post-death beneficiary distribution rules. While original owners have no lifetime RMDs, upon the death of the Roth IRA owner, the account assets become fully subject to the beneficiary minimum distribution rules of IRC Section 401(a)(9)(B). Beneficiaries must deplete the inherited Roth IRA under the statutory 10-year rule or over an Eligible Designated Beneficiary's life expectancy.

SECURE 2.0 Reform for Employer Roth Accounts

Prior to 2024, employer-sponsored designated Roth accounts (such as Roth 401(k) and Roth 403(b) accounts) were paradoxically subject to lifetime RMD rules, forcing plan participants to roll their funds into a Roth IRA prior to their RBD to avoid mandatory distributions. Section 325 of SECURE 2.0 repealed lifetime RMDs for employer designated Roth accounts effective for taxable years beginning after December 31, 2023, harmonizing employer Roth plans with the longstanding, permanent lifetime exemption enjoyed by Roth IRAs.

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Bank Custodial Operational Mandates

Financial institutions acting as IRA trustees or custodians bear statutory notification and reporting obligations to ensure customer compliance with RMD rules:

1. Annual RMD Customer Notice (IRS Notice 2002-27 and Notice 2003-3)

Pursuant to IRS Notice 2002-27 and Notice 2003-3, an IRA custodian must furnish an annual RMD Notice to every IRA owner for whom an RMD is required. This notice must be delivered by January 31 of the calendar year in which the RMD is due. The notice must:

• Inform the account owner that an RMD is required from their account for the current calendar year;
• State the exact deadline by which the distribution must be taken (typically December 31, or April 1 for an initial RMD year); and
• Either provide the exact calculated RMD dollar amount or offer to calculate the distribution amount upon the customer's request.

2. IRS Form 5498 Reporting

Custodians report RMD tracking data directly to the IRS and account owners on IRS Form 5498 (IRA Contribution Information) by May 31 following the contribution/tax year:

• Box 11: The custodian must check this box if an RMD is required from the account for the following calendar year.
• Box 12a: Optional box where the custodian may report the date by which the RMD must be taken.
• Box 12b: Optional box where the custodian may report the calculated RMD amount.

3. Core Banking Automation and Automated Distributions

Modern bank trust and custodial platforms maintain automated date-of-birth surveillance. When an account owner reaches their statutory RMD age (73 or 75), the system flags the account, generates the January 31 RMD notice, and offers recurring automated distribution schedules (monthly, quarterly, semi-annually, or annually) to ensure timely distribution prior to the December 31 cutoff.

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Realistic Bank Administrative Scenario: The Still-Working Executive

At First Republic Bank & Trust, CISP operations officer Deborah conducts a fourth-quarter compliance review of accounts approaching the Required Beginning Date. She identifies the Traditional IRA of customer Ronald, born August 22, 1952.

Client Circumstances

• Ronald attains age 73 on August 22, 2025. His Traditional IRA ledger balance at the bank on December 31, 2024 was $1,200,000.
• Ronald is actively employed as Executive Vice President of an engineering firm, earning $240,000 in annual W-2 wages. He also participates in his employer's 401(k) plan.
• During an account review, Ronald states that his workplace retirement plan administrator told him that because he is "still working," he has no RMD requirements and does not need to withdraw any funds from his bank Traditional IRA until he formally retires at age 75.

Administrative Analysis and Compliance Resolution

1. Correcting the "Still Working" Misconception: Deborah explains to Ronald that under IRC Section 401(a)(9)(C)(ii), the "still working" exception applies strictly to qualified employer plans (his 401(k)). Under IRC Section 408(a)(6) and Treasury Regulation Section 1.408-8, IRAs have no still-working exception. Ronald is legally required to begin distributions from his Traditional IRA based on reaching age 73 in 2025.
2. Identifying the Statutory RBD: Because Ronald turns 73 in 2025, his first distribution calendar year is 2025, and his statutory Required Beginning Date is April 1, 2026.
3. Modeling the Double RMD Tax Trap: Deborah calculates Ronald's 2025 RMD under the Uniform Lifetime Table (factor 26.5 for age 73): $1,200,000 ÷ 26.5 = $45,283.02. She demonstrates that if Ronald delays this distribution to March 2026, he will be forced to take both his 2025 RMD ($45,283.02) and his 2026 RMD (approximately $47,000) during calendar year 2026. This would add over $92,000 of ordinary taxable income on top of his $240,000 W-2 salary in one year, pushing more of his income into higher marginal brackets and potentially raising his Medicare IRMAA surcharges two years later.
4. Execution: Ronald agrees to distribute his $45,283.02 initial RMD in November 2025. Deborah executes the transaction, codes the distribution on Form 1099-R with Code 7, and sets up an automated distribution schedule for December of each subsequent year, achieving total statutory compliance.