can you provide some current guidance regarding required minimum distribution?

[Loretta P]

Required Minimum Distributions or RMD is the minimum amount of money you must withdraw from your retirement plan if you were 72 years young in 2023 or once you turn 73 in 2023.  

The rules for RMD apply to all employer-sponsered retirement plans including pensions, 401(k), 403(b), 457(b) and profit-sharing plans as well as any traditional IRA and IRA based plans.  As long as the owner of a Roth IRA is still living,  there is no RMD requirement.

Normally the financial institution will calculate the RMD for you.  The IRS has a worksheet you can use to calculate RMD as well.  

What is the required minimum distribution once I reach age 72? 

What is an RMD? 

[Terri Lynn]

Good afternoon, Jhhipp, and thank you for joining us!

You asked for some guidance regarding required minimum distributions.

Your qualified retirement account requires a minimum withdrawal each year, known as the required minimum distribution (RMD). This applies to Individual Retirement Accounts (IRAs), SIMPLE IRAs, and SEP IRAs. It's worth noting that some accounts, such as Roth IRAs, do not require withdrawals until the owner's death.

It's possible to withdraw more than the minimum required amount, but these withdrawals will be included in your taxable income, except for any portion previously taxed or eligible for tax-free distribution from designated Roth accounts.

The SECURE Act of 2019, as amended, raised the age at which people must start taking RMDs from 70½ to 72. The SECURE 2.0 Act of December 2022 increased the required age even further to 73 for those turning 73 between 2023 and 2032, with plans to increase the age to 75 in 2033.

It's important to note that the required beginning date for RMDs is April 1st of the calendar year following the year you turn 73. If you turn 73 in 2024, you have until April 1, 2025, to take your first RMD if your birthdate falls between January 1, 1951, and December 31, 1951.

Many people opt to take their first RMD by December 31 of the year they turn 73 to avoid taking two distributions in one year and owing taxes on both if they wait until April 1 of the following year. This option is only available with your first RMD. 

The following table provides clarity on when you'll be required to take RMDs from your retirement accounts:

Born before July 1, 1949	RMD age is 70 1/2
Born July 1, 1949 to December 31, 1950	RMD age is 72
Born January 1, 1951 to December 31, 1959	RMD age is 73
Born after January 1, 1960	RMD age is 75

To calculate the RMD for an IRA each year, the IRA balance as of December 31st of the previous calendar year is divided by the appropriate life expectancy factor from the IRS tables. The tables can be found on the IRS website here at the bottom of the page: 

• Required Minimum Distribuions for Beneficiaries

Employer's qualified retirement plans, such as 401(k), 403(b), 457(b), and profit-sharing plans, also require annual distributions. The plan administrator is typically responsible for calculating and making timely payments of the RMD amount from these plans. However, if you are an employee who still works for the employer and do not own more than 5% of the company stock, you may delay your RMD until retirement.

For more information on RMD's, check out these additional links below:

• What is Pub 590? 
• Pub 590B

Please feel free to reach backout with any additional questions or concerns you might have!

Have a great rest of your day!

Terri Lynn, EA

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[DBear1]

Worksheet link does not work.

[LenaH]

The RMD worksheet can be found here. 

@DBear1