SECURE 2.0 RMD - why age 73?

Maybe I should not ask "why", but here it goes:

Is there a reason ages 73 and 75 were chosen for the RMD age? Was it based on:

• data around life expectancy, such as a specific life expectancy table
• a specific report that shows employees are working longer and delaying retirement
• anecdotal evidence 
• balancing act with the budget and those ages just made the 10 year projections workout nicely
• moving from age 72 to 73 is the easiest change
• the drafters favorite numbers

Thanks for any thoughts/comments.

Whatever reason that may be professed, the most likely is meeting the requirements for making the bill fit within fiscal parameters which are tied to a 10-year time frame.  The same rationale applies to defining a High Paid person for purposes of mandating Roth catch-up contributions.  Why $145,000 instead of the HCE limit?  Roth catch-ups for High Paids at $145,000 was just enough of a revenue raiser.

The ten-year budget-reconciliation period for the Consolidated Appropriations Act, 2023, of which SECURE 2022 is a division, is fiscal years 2023-2032—that is, October 1, 2022 to September 30, 2032.

The change to age 75 applies “[i]n the case of an individual who attains age 74 after December 31, 2032[.]” Internal Revenue Code § 401(a)(9)(C)(v)(II).

Someone born in 1960 would reach age 74 in 2034, age 75 in 2035, and might have a required beginning date as soon as April 1, 2036.

For someone born in 1960, an applicable age of 73 would result in a required beginning date no sooner than April 1, 2034 and a first distribution calendar year no sooner than the year ended December 31, 2033—1¼ years after the budget-reconciliation period ends.

While I haven’t read the whole report, I imagine the revenue estimators could have assumed the change to an applicable age of 75 for those born in 1960 and later would bear no revenue loss in the budget-reconciliation period ending September 30, 2032.

The Joint Committee on Taxation estimate scored the combination of both increases in applicable age for a required beginning date as a revenue loss of only about $7 billion for fiscal years 2023-2032.

JCX-21-22 2022-12-22.pdf

We can ponder what goes on inside the heads of politicians but those discussions are best had well into Friday happy hour!