On December 29, 2022, President Biden signed the Omnibus Bill (HR 2617) also known as SECURE ACT 2.0. The new law includes provisions that will incrementally increase the required beginning date for Mandatory Distributions for Individual Retirement Accounts. In most states, for purposes of unclaimed property, the dormancy trigger period is delayed until the requirement beginning distribution date mandated by federal law. Currently, the required beginning date is the date the owner of the IRA turns 72. Effective immediately, the required distribution age is 73.
The incremental increase of the required minimum distribution age is as follows:
- In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2033, the applicable age is 73.
- In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75.
The amendments apply to distributions required to be made after December 31, 2022, with respect to individuals who attain age 72 after such date. In other words, the increases do not apply to anyone who attained the age of 72 before December 31, 2022.
Under the Revised Uniform Unclaimed Property Act of 2016, the trigger for dormancy was changed from “required minimum distribution date” to the date the owner turned 70 years old. At the time, age 70 was the required distribution date and the change reflected a desire to make the analysis easier. However, in 2020, Congress passed the SECURE Act 1.0 which changed the minimum distribution age from 70 to 72. Some states that adopted RUUPA, changed their law back to required minimum distribution age. Some did not. With this change, the states will be wholly inconsistent on the trigger date.