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Be sure to take your RMD by Dec 31

Be sure to take your RMD by Dec 31

December 21, 2023

Just dropping you a quick reminder to double-check your qualified distributions to make sure your RMD has been satisfied for 2023.

If you’re unsure and would like a hand figuring it out, just give us a call at (703) 779-7410 and we’ll be happy to help.

Have questions about RMDs? Keep reading.

What’s an RMD?

After you turn a certain age (currently 73), the IRS requires that you withdraw at least a Required Minimum Distribution (RMD) from your tax-deferred accounts each year.1

There's one plot twist to keep in mind:

Starting in 2023, the RMD beginning age increased to age 73. So, if you turned 72 in 2023, you won't have to take your first RMD until April 1, 2025.2

That's because in your first eligible year, you can delay your first RMD (and only your first) until April 1 of the following year.

All future RMDs must be taken by December 31 each year.

Keep in mind that delaying that first RMD means you’ll need to take two in the same calendar year, which could significantly impact your taxes.

What happens if I don’t take my RMD?

If you don’t withdraw at least your RMD amount each year, the IRS might impose a penalty on the missed amount.

Which withdrawals count toward my RMD?

RMD rules only apply to your tax-deferred retirement accounts, so any withdrawal from these accounts will count toward satisfying your annual requirement. Tax-deferred accounts include:

  • Traditional IRAs

  • Rollover IRAs

  • SIMPLE IRAs

  • SEP IRAs

  • Most small-business retirement accounts

  • Most 401(k) and 403(b) plans

Roth IRAs are typically excluded because they are funded with after-tax money. However, if you inherited a Roth IRA from someone other than your spouse, you will usually be required to take RMDs.3

Sources:

1. https://www.schwab.com/ira/traditional-ira/withdrawal-rules/required-minimum-distributions

2. https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs

3. https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary


This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific situation with a qualified tax professional