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?
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 |
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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