That’s the age when minimum withdrawals from retirement accounts would be required in the year 2033, up from 72 now—giving people more time to build their retirement savings and defer taxes—if legislation passed by the House of Representatives this week becomes law.
Contributions to retirement plans like 401(k)s and individual retirement accounts allow you to put away money that grows tax-free, and you can usually deduct some or all of your contributions from federal income taxes in the year they are made. But you still owe tax when you withdraw the funds, and the IRS requires you to start taking minimum distributions each year once you reach a certain age.
The proposed change in the retirement account rules is one of several in the Securing a Strong Retirement Act of 2022, which passed the House in a 414-5 vote Tuesday. The bill raises the required minimum distribution age for employer-sponsored defined contribution plans like 401(k) accounts and traditional (non-Roth) IRAs from 72 years to 73 on Jan. 1, 2023, 74 in 2030, and 75 in 2033.
The distribution requirements are meant to discourage savers from using the tax-deferred accounts for estate planning, rather than for their own retirement, House Democrats said in a summary of the legislation.
The legislation would also provide a tax credit for small businesses offering retirement plans to their employees, increase the yearly contribution catch-up limits for older workers to $10,000 in some cases, and expand automatic enrollment requirements for company 401(k) and 403(b) programs.
“These changes will make it easier for American families to prepare for a financially secure retirement,” said the bill’s lead sponsor, House Ways and Means Committee Chairman Richard E. Neal (D-MA), in a statement.
The legislation still has to pass the U.S. Senate and be signed by the president.
Have a question, comment, or story to share? You can reach Terry at email@example.com.
Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning!