April 20, 2023
What we’ll cover:
RMD stands for Required Minimum Distribution. It’s the minimum amount of money you have to withdraw (or “distribute” in IRS speak) from certain types of retirement savings accounts each year after a specific age. RMD rules are outlined by the IRS, and distributions are usually subject to income tax.
You’ll have to pay attention to RMD rules if you have any one of these retirement savings accounts or retirement plans:
You may have noticed that Roth IRAs are not on the list. That’s because you don’t have to take RMDs from your Roth IRA if you’re the original owner of the account. But the person who inherits your account – your beneficiary – may have to take RMDs after your passing (see IRS Topic: “Required Minimum Distributions for IRA Beneficiaries”).
Good to know: Starting in 2024, RMD rules will not apply to Roth 401(k) participants while they’re alive (but their beneficiaries may have to take RMDs after the account owner’s passing). Consult with a tax professional or visit the IRS website for details.
RMDs are withdrawals that you must make starting at age 73 (or age 72 if you turned 72 on or before December 31, 2022). RMDs are required by the IRS, and failure to take RMDs may result in penalties.
The IRS website can provide details on your options and obligation, as well as additional information regarding how RMD amounts are calculated (see: “Required Minimum Distributions”).
Keep in mind that RMD rules can be complicated. This is why it’s a good idea to get help from a financial advisor or tax professional.
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