Retirement Savers: Don't Miss Your Required Minimum Distributions
Retirement savers aged 73 and above are reminded to take note of the rules surrounding required minimum distributions (RMDs). These mandatory withdrawals apply to traditional IRAs, 401(k)s, and 403(b)s, but not Roth IRAs. The amount to be withdrawn depends on the investor's age and the total value of their retirement accounts.
RMDs must be taken from each 401(k) account separately, while IRAs and 403(b)s can be aggregated. The first RMD can be delayed until April 1 of the year following the investor's 73rd birthday, but subsequent distributions must be taken by the end of the calendar year. It's crucial to note that delaying the first RMD until April 1 results in two taxable distributions in the same tax year.
For instance, a $50,000 retirement savings balance at age 73 would require an RMD of $1,886.79. By age 100, this amount increases to $7,812.50. The key age thresholds for RMDs are 73 (for those turning 72 after 2022), and 75 (starting in 2033), with minimum withdrawals calculated based on IRS life expectancy tables starting at these ages.
RMDs are taxable and must be taken from retirement accounts by the specified deadlines. Failing to do so can result in a significant penalty. It's recommended that investors consult with a financial advisor to ensure they understand and comply with the RMD rules.
