Your 2024-2025 Retirement and Required Minimum Distribution (RMD) FAQs
You’ve worked hard to build your retirement savings, but you can’t keep those funds in your account forever. Thanks to the SECURE Act 2.0, changes have been made to when Required Minimum Distributions (RMDs) begin. If you turn 73 in 2024 or later, you must begin taking RMDs by April 1 of the year following the year you turn 73. For each year after your required beginning date (RBD), you must withdraw your RMD by December 31.
Can you take more than the RMD?
Yes, you can withdraw more than the required minimum. However, the amount withdrawn will be included in your taxable income, except for any portion that has already been taxed or qualifies for tax-free withdrawal (such as a Roth IRA).
What happens if you don’t take your RMD?
If you don’t take your required distribution or withdraw less than the required amount, the penalty for failing to take the RMD has been reduced from 50% to 25% (and in some cases, to 10% if the failure is corrected in a timely manner). However, it’s important to withdraw the full amount to avoid these penalties.
How much will you need to withdraw?
Your RMD is calculated based on the account balance as of December 31 of the previous year, divided by a life expectancy factor provided by the IRS’s “Uniform Lifetime Table.” If your spouse is the sole beneficiary and is more than 10 years younger than you, a different table may apply.
When must you start taking RMDs?
- IRAs (including SEPs and SIMPLE IRAs):
- If you were born before July 1, 1949: RMDs begin at age 70½, with the first distribution due by April 1 of the year following the year you turn 70½.
- If you were born between July 1, 1949, and December 31, 1950: RMDs begin at age 72, with the first distribution due by April 1 of the year following the year you turn 72.
- If you were born after January 1, 1951: RMDs begin at age 73, with the first distribution due by April 1 of the year following the year you turn 73.
- 401(k), Profit-Sharing, 403(b), or Other Defined Contribution Plans:
- Generally, April 1 following the later of the calendar year in which you:
- Reach age 73 (or age 72 if born before 1951), or
- Retire (if your plan allows you to delay RMDs until after retirement).
- Generally, April 1 following the later of the calendar year in which you:
How is an RMD taxed?
RMD withdrawals are taxed as ordinary income based on your current income tax bracket. However, if part of the RMD is a qualified Roth IRA distribution, that portion will be tax-free. Note that RMD amounts cannot be rolled over into another tax-deferred account.
Have questions about the SECURE Act 2.0 or your RMD strategy?
With the SECURE Act 2.0 bringing changes to retirement and tax planning, we’re here to help you navigate any questions or concerns. Contact us today at (860) 461-1709 or via email to ensure your retirement strategy is on track.
