The Internal Revenue Service (IRS) has specific rules for retirees turning 73 in 2024. These rules cover Required Minimum Distributions (RMDs) from retirement accounts like traditional IRAs, 401(k)s, and 403(b)s. Normally, RMDs must be taken by December 31 each year.
But those turning 73 in 2024 can delay their first RMD until April 1, 2025. This is a one-time delay for the first RMD only. After that first RMD, all future ones are due by December 31.
So if you delay the 2024 RMD to 2025, you’ll have to take two that year – one for 2024 and one for 2025. This could bump you into a higher tax bracket, since RMDs are taxable. RMD rules apply to traditional, SEP, and SIMPLE IRAs, as well as 401(k), 403(b), and 457(b) plans.
Roth IRAs are exempt from RMDs during the owner’s lifetime.
Irs reminders for retirees’ RMD deadlines
Your IRA trustee or plan administrator usually calculates your RMD amount.
It’s listed in Box 12b on Form 5498. For the first RMD due April 1, 2025, check your 2023 Form 5498 issued in early 2024. Some people can delay RMDs past age 73.
If you’re working and your plan allows, you may wait until April 1 the year after retiring. Business owners with 5%+ ownership and those in SEP or SIMPLE IRAs can’t do this. Certain pre-1987 403(b) plans also have special rules.
Failing to take RMDs results in a 25% IRS penalty on the amount not withdrawn. So it’s important to follow the rules and take RMDs on time. Consult a tax or financial professional if you have questions about your specific situation.
Image Credits: Photo by Estée Janssens on Unsplash
