USE CALCULATOR

MORE INFO

AGE 73 and Older
What Is a Required Minimum Distribution (RMD)?
A required minimum distribution (RMD) is the amount of money that must be withdrawn from an employer-sponsored retirement plan, traditional IRA, SEP, or SIMPLE individual retirement account (IRA) by owners and qualified retirement plan participants of retirement age.
​
In 2023, the age for withdrawing from retirement accounts changed. You must begin withdrawing from a retirement account by April 1 following the year account holders reach age 73. The retiree must then withdraw the RMD amount each subsequent year based on the current RMD calculation.

• The age at which owners of retirement accounts must start taking RMDs increased to 73, starting January 1, 2023. The current age to begin taking RMDs is 72, so individuals will have an additional year to delay taking a mandatory withdrawal of deferred savings from their retirement accounts. Two important things to think about: If you turned 72 in 2022 or earlier, you will need to continue taking RMDs as scheduled. If you're turning 72 in 2023 and have already scheduled your withdrawal, you may want to consider updating your withdrawal plan. Good to know: SECURE 2.0 also pushes the age at which RMDs must start to 75 starting in 2033.
• Starting in 2023, the steep penalty for failing to take an RMD decreased to 25% of the RMD amount not taken, from 50% currently. The penalty will be reduced to 10% for IRA owners if the account owner withdraws the RMD amount previously not taken and submits a corrected tax return in a timely manner.
• Additionally, Roth accounts in employer retirement plans will be exempt from the RMD requirements starting in 2024.
• And beginning immediately, for in-plan annuity payments that exceed the participant's RMD amount, the excess annuity payment can be applied to the year's RMD.

KEY TAKE AWAYS

• 25% Penalty - The required minimum distribution (RMD) is the amount you must take out of your account to avoid tax penalty consequences. Retirees often take more than the RMD requirement each year on current withdrawals.
• MULTIPLE IRA's - If you have multiple accounts, you will usually need to calculate the RMD for each separately and may have to take an RMD from each or all from one qualified account of your choice.
• INHERITED IRA - The SECURE Act of 2019 changed the distribution rules for some inherited IRAs, effectively eliminating the "stretch IRA"—an estate planning strategy that extended the tax-deferral benefits of IRAs.
• ROTH IRA - The RMD rules do not apply to ROTH IRA's while the owner is still alive. The funds inside of a ROTH must be aged 5 years and the owner must be over 59 1/2 to access the growth of the account tax free. Funds paid into a ROTH are after tax.
• ROTH 401K - Roth 401(k) accounts are subject to the same required minimum distribution (RMD) rules that apply to traditional 401(k) accounts. Therefore, the account owner must start taking RMDs from her Roth 401(k) for the year in which she reaches age 73 and continue for every year thereafter. ​

HOW TO MAXIMIZE TAX STRATEGIES
​TAX STRATEGIES can make a significant difference in your retirement planning years. We find many individuals do not utilize the strategies available to them each year. Remember many of these strategies must be used prior to December 31st in order to be used to your advantage. ​​Request your FREE TAX STRATEGY SESSION...

Understanding Required Minimum Distribution (RMD)
A required minimum distribution (RMD) acts as a safeguard against people using a retirement account to avoid paying taxes. Required minimum distributions are determined by dividing the retirement account’s prior year-end fair market value (FMV) by the applicable distribution period or life expectancy. The Internal Revenue Service (IRS) has a worksheet to help taxpayers calculate the amount they must withdraw. Generally, your account custodian or plan administrator will calculate these amounts and report them to the IRS.

Some qualified plans allow certain participants to defer the start of their RMDs until they actually retire, even if they are older than age 73. Qualified plan participants should check with their employers to determine whether they are eligible for this deferral.

It should be noted that while an account holder must withdraw the required minimum distribution amount, they can also withdraw above that amount. If the account holder wants to withdraw 100% of the account in the first year, that’s perfectly legal, but the tax bill could be a shocker.

---

RESOURCES
Internal Revenue Service. "Retirement Plan and IRA Required Minimum Distributions FAQs." Accessed Nov. 14 2021.
Internal Revenue Service. "Retirement Topics — Required Minimum Distributions (RMDs)." Accessed Nov. 14, 2021.
Internal Revenue Service. "IRA Required Minimum Distribution Worksheet." Accessed Nov. 14, 2021.
Internal Revenue Service. "Required Minimum Distribution Worksheets." Accessed Nov. 14, 2021.