Required Minimum Distributions
What we need to know…
The Required Minimum Distributions (RMDs) are the minimum amounts you are require withdraw / distributing from your IRA or retirement plan account when you reach age 72.
Beginning the tax year 2023, the age rules changed for RMDs. RMDs will begin when you are at age 73 for taxpayers that reach age 72 after December 31, 2022.
The accounts that are designated Roth in a 401(k) or 403(b) plan are subject to the RMD rules for 2022 and 2023. Going forward for 2024 and later years, RMDs are no longer required from designated Roth accounts. Roth IRAs are not subject to RMDs until after the death of the original account owner.
RMDs from an IRA
To meet your RMD requirement, can be done by taking a withdrawal from one or more of your traditional IRAs, or SEP, SIMPLE and SARSEP IRAs. It’s not necessary to take a withdrawal from each of your IRAs, but your total withdrawals must be at least equal to the total RMD due from all IRAs in the aggregate.
Some highlights:
Reach age 72 in 2022: For the 1stt RMD from your IRAs is due by April 1, 2023, based on the December 31, 2021, account balances. Your 2nd RMD is due by December 31, 2023, based on the December 31, 2022, account balances.
Reach age 72 in 2023: If you reach age 72 in 2023, you don’t have an RMD requirement for 2023. Your 1st RMD is for 2024, the year you reach age 73, and is due by April 1, 2025.
Reach age 73 in 2023: If you reach age 73 in 2023, you were 72 in 2022 and must take your 1st RMD for 2022 by April 1, 2023, based on your December 31, 2021, account balances.
RMDs from a retirement plan
To satisfy the RMD requirements in a retirement plan, you must take RMDs separately from each of your retirement plans. If you reached age 72 in 2022, your first RMD for 2022 is due by April 1, 2023, based on your December 31, 2021, account balance. Your 2023 RMD is due by December 31, 2023, based on your December 31, 2022, account balance.
A few caveats are worth knowing…
If you’re still employed by the plan sponsor, and not a 5% owner, your plan may allow you to delay taking RMDs from that workplace retirement plan until you retire.
IRS rules always require you to take RMDs beginning at age 72 from traditional IRAs, SEP, SIMPLE and SARSEP IRA plans, even if you’re still employed.
For more information about the age 72 or 73 distribution requirements, please contact our office at 310.666.0244
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