What are RMD’s? 

RMDs are Required Minimum Distributions. These apply to your Qualified Accounts. Your 401(k)’s, IRA’s, 403(b)’s, anyting that has been growing tax deferred and you have not paid taxes on that money yet.

Why? 

Because your biggest beneficiary wants their money. Your long lost Uncle Sam. There is a group of retirees who plan on using their money in retirement, they need it for monthly or annual incomes to supplement their Social Security, pensions, and other investment or rental income. Then there’s another group who has no need or plans to withdraw money from their qualified accounts. RMDs apply to the second group.

RMDs are the MINIMUM that is required to be withdrawn from your account, so if you are already taking money out in the form of income, you do not have to take additional money out. However, if you are not taking anything out, then you must meet at least the minimum amount required by the IRS. There are penalties if you knowingly or unknowingly miss taking your RMDs, so it is important that our client’s are aware. If they have multiple qualified accounts, they can calculate the total and withdraw that from a single account or withdraw from each account. And then it is all taxable as ordinary income, since it went into the account without paying any taxes.

Secure Act and Secure Act 2.0

RMDs were required at age 70 1/2, but when they passed the Secure Act in 2020, they moved that to the age of 72. The goal post has moved again to 72 on January 31, 2023. And finally, it moved it to age 75, if you turn 75 after 2033.