Per the Retirement Enhancement SECURE Act, you must take an annual distribution (referred to as Required Minimum Distributions, or “RMD”) from your Individual Retirement Account (IRA) upon reaching the age of 73.
If you do not withdraw your full required distribution amount in any year, you may be subject to an IRS penalty of 50% of the amount not withdrawn.
The deadline for taking your RMD is December 31 each year. For your first RMD, and only your first, you may delay taking a distribution until April 1 of the year after you turn 73. For example, if you turned 73 in June of this year, you have two choices:
- You can take your first RMD by December 31 this year
OR
- You can delay taking your first RMD until April 1 next year (the year after you turn 73).
If you choose to delay, you’ll have to take your first and second RMD in the same year, which may push you into a higher tax bracket.
If you’re still working, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k) or 403(b). If you meet all of the requirements, you can delay taking an RMD from the account until April 1 of the year after you retire.
Additional Information
- Aspiration is required to report all accounts subject to RMDs to the IRS.
- You may satisfy this distribution requirement with a withdrawal from your Redwood IRA or from an IRA you hold at another financial institution.
- You may withdraw more than the minimum amount without penalty.
Feel free to visit the IRS website which goes into further detail about RMDs: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds
Comments