If you are 72 years old and you have retirement accounts, you may need to take required minimum distributions from those retirement accounts.
Make sure to plan ahead to determine the tax consequences of RMDs, especially for those who are in their first year of RMDs.
- RMDs are the minimum amount you must annually withdraw from your retirement accounts (e.g., 401(k) or IRA)
- The required minimum distributions requirement (RMDs) from tax-qualified retirement plans and IRAs changed to age 72 for individuals born on or after July 1, 1949.
- An IRA trustee, or plan administrator, must either report the amount of the RMD to the IRA owner or offer to calculate it. To calculate your RMD, you may refer RMD table on the IRS website.
So, how can you figure out how much you need to take out based on the mentioned table? Here’s how to do the calculation:
- Figure out the balance of your IRA account.
- Find your age on the table and note the distribution period number.
- Divide the total balance of your account by the distribution period. This is your required
- Not taking a required distribution, or not withdrawing enough, could mean a 50% excise tax on the amount not distributed.
If you need further guidance, please do not hesitate to contact us.