What is RMD?
RMD stands for Required Minimum Distribution, which refers to the minimum amount that individuals with certain types of retirement accounts, such as traditional IRAs or employer-sponsored retirement plans like 401(k)s, must withdraw from their accounts each year once they reach a certain age. The purpose of RMDs is to ensure that individuals withdraw a portion of their retirement savings each year and pay the necessary taxes on those withdrawals, as these accounts generally offer tax-deferred growth during the accumulation phase. Failure to take the required minimum distribution can result in substantial tax penalties
What are the latest rules for RMD?
You generally must start taking withdrawals from your traditional IRA, SEP IRA, SIMPLE IRA, and retirement plan accounts when you reach age 72 (73 if you reach age 72 after Dec. 31, 2022).
Roth IRAs do not require withdrawals until after the death of the owner. Designated Roth accounts in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. However, for 2024 and later years, RMDs are no longer required from designated Roth accounts. You must still take RMDs from designated Roth accounts for 2023, including those with a required beginning date of April 1, 2024.
It’s essential to stay updated on any changes to RMD rules, as regulations can evolve over time with new legislation or regulatory updates. Therefore, consulting with a financial advisor or tax professional is recommended to ensure compliance with the latest RMD requirements. For more questions and answers regarding RMD’s, please refer to the IRS website. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
