# Born In Second Half Of 1949? Act By April 1 To Avoid RMD Penalty

Some people wait until the last minute to take care of things. If that’s you, here is a last-minute RMD Alert.

IRA (and 401(k)) owners born in the last half of 1949 (after June 30, 1949, but before Jan. 1, 1950): Did you take your RMD (required minimum distribution) in 2021? If not you need to do so by this Friday, April 1, 2022, to avoid a steep excise tax of 50%. Call your IRA custodian (or 401(k) provider) for help.

Note that taxpayers with 1949 birthdays before July 1, 1949, are not affected because their first RMD was triggered before â€” when they turned 70 1/2. The Setting Every Community Up for Retirement Enhancement (SECURE) Act changed the RMD age from 70 1/2 to 72 beginning in 2020 (RMDs were suspended for the year 2020).

## RMD Calculations

To give you an idea of â€‹â€‹what’s involved when calculating your RMD, I can share a tool from Brentmark Retirement Distributions Planner, Note that most people, not all, will use the Uniform Lifetime table in IRS Publication 590-B. (Check with your tax adviser.)

These are my inputs into the software:

First year of analysis: 2021. IRA owner’s birthdate: July 1, 1949. 12/31/2020 IRA balance: \$250,000.

The outcome: The RMD for 2021 is calculated using the life expectancy factor of 25.6, giving you an RMD of just under \$10,000 using the 12/31/2020 balance of \$250,000. (This life expectancy factor is for 2021 RMDs for age 72 under the Uniform Lifetime table that applied before 2022, the table was revised in 2022.)

For people born in the last half of 1949, 25.6 would be the divisor to use for the 2021 RMD.

## A Change in Tables

The second year of analysis (2022) uses the new Uniform Lifetime table adopted in 2022. The life expectancy factor is 26.5 for a 73-year-old for 2022. The third (2023) is 25.5 for age 74.

The complication you want to be aware of has to do with birthdates in 1950 and later. If the individual’s date of birth is Jan. 1, 1950, there would be no RMD for 2021, when the IRA owner is 71. The first RMD would be for 2022 when the individual reaches age 72. The life expectancy factor under the new Uniform Lifetime Table is 27.4 for age 72 in 2022 Then, as in the above example, for age 73, it’s 26.5; for age 74, it’s 25.5.

## After April 1, 2022

This confusing comparison will vanish after April 1, 2022, since all RMDs will be computed under the new tables in effect in 2022 for anyone reaching age 72 at any time during a calendar year. That is, no matter if you are born in the beginning or ending part of the calendar year (which we had to worry about when the RMD age was 70 1/2) no longer matters.

Anyone born at any time in 1950 is 72 in 2022 for purposes of RMDs. The first RMD for 2022 is calculated based on 12/31/2021 values. A special one-time-only rule allows you to wait until April 1, 2023, to take your first RMD (in this case your 2022 RMD), but you must also take your 2023 RMD before 12/31/2023, calculated on 12 /31/2022 values.

Still complicated. But, much less so.

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