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Tapping your savings, even if you'd prefer not to – You’ve been salting away a portion of your earned income into tax-advantaged individual retirement accounts (IRA) or 401(k) accounts for years. Nice work. But you can’t avoid paying taxes indefinitely. You’ll eventually need to start withdrawing from those accounts in the form of required minimum distributions (RMDs for short). The IRS will tax those distributions as ordinary income.  


Your RMD threshold depends on your age The age rules for RMDs have been a moving target. In 2019, Congress changed the long-standing age threshold for RMDs from 70 ½ to 72. Then, a 2022 law raised the age from 72 to 73—the current threshold—effective in 2023. In 2033, the age threshold rises again to 75.

Three Turning 73 next year? The clock is ticking! If you’re celebrating your 73rd birthday in 2024, you’ll have to take your first RMD by April 1, 2025. But if you turned 73 in 2023, the IRS requires you to follow the 2022 RMD rules, which means you should have already taken your first RMD by last April 1 (for 2022) and your 2023 RMD by December 31, 2023.

Still working? You might be able to delay RMDs Even if you’re 73 or older, your 401(k) or 403(b) account more than likely can remain shielded from RMDs until April 1 of the year after you retire. Check with your retirement-plan administrator to determine if your plan allows you to delay RMDs—not all of them do. There’s no exemption if you own at least 5% of your business, however.


IRAs, Roth IRAs: What's the difference? With a traditional IRA, any regular contributions or investment gains are shielded from taxes until your RMD age kicks in. Roth IRAs are similar, but with two critical differences: (1) Roth IRA contributions are made with after-tax dollars, so you’re not taxed on withdrawals from a Roth, and (2) RMDs only apply to beneficiaries.


Other account types subject to RMDs Retirement-savings accounts subject to RMD rules include: IRAs (including traditional, SEP and SIMPLE); and 401(k), 403(b), and 457(b) plans. In 2024, Roth 401(k), Roth 403(b), and Roth 457(b) accounts are no longer subject to RMDs.


Staying out of the penalty box  If you forget to take your RMD, you can potentially avoid the standard 25% penalty by (a) taking the distribution and (b) filing IRS Form 5329, requesting a waiver, and explaining why you missed the deadline. If the IRS dings you, the 25% penalty may be reduced to 10% if you correct the shortfall within a two-year window—or it could be waived entirely if the missed RMD was due to an error.


Sharpen your pencil and do the math The minimum amount you should withdraw each year is calculated by dividing your account balance at the end of the previous year by the distribution period based on your age found in a table published by the IRS (see FIGURE 1 below and IRS Publication 590 at www.irs.gov for additional details). Talk to your tax professional to see if other IRS tables are more appropriate for your circumstances.


Multiple accounts? Consider aggregation If you have account balances in more than one account type, you need to determine your RMD for each account separately. But some account types, including traditional IRAs, rollover IRAs, SEP, and SIMPLE accounts, can be aggregated (i.e., you can add up the RMD amount due for accounts held at different institutions but withdraw it from only one account). If you own more than one 401(k) account, you’re not permitted to aggregate them.


A win-win charitable contribution You can reduce your taxable income while qualifying toward your RMD by directing up to $100,000 to a qualified 501(c)(3) charitable organization of your choice. Your retirement-account provider—not you—must issue the qualified charitable distribution (QCD) on your behalf by December 31 for the tax year. A QCD could be advantageous for high earners concerned about being bumped into a higher tax bracket or being forced to pay higher income-adjusted Medicare premiums.



Calculating Your RMD: The IRS Uniform Lifetime Table

For use by:

  • Unmarried account owners
  • Married account owners whose spouses aren't more than 10 years younger
  • Married account owners whose spouses aren't sole beneficiaries of their IRAs
Age Distribution
Age Distribution
Age Distribution
Age Distribution
72 27.4 84 16.8 96 8.4 108 3.9
73 26.5 85 16 97 7.8 109 3.7
74 25.5 86 15.2 98 7.3 110 3.5
75 24.6 87 14.4 99 6.8 111 3.4
76 23.7 88 13.7 100 6.4 112 3.3
77 22.9 89 12.9 101 6 113 3.1
78 22 90 12.2 102 5.6 114 3
79 21.1 91 11.5 103 5.2 115 2.9
80 20.2 92 10.8 104 4.9 116 2.8
81 19.4 93 10.1 105 4.6 117 2.7
82 18.5 94 9.5 106 4.3 118 2.5
83 17.7 95 8.9 107 4.1 119 2.3
  120+ 2

Source: irs.gov

Example: You’re turning 73 in 2024. On December 31, 2023, your IRA balance stands at $400,000. If you’re qualified to use the table shown above, you would divide your $400,000 end-of-year account balance by 26.5. Your required minimum distribution for 2023 would be $15,094.



Talk to your financial or tax professional to develop a RMD plan that fits your needs.


All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting or legal advice. As with all matters of an investment, tax, or legal nature, you and your clients should consult with a qualified tax or legal professional regarding your or your client’s specific legal or tax situation, as applicable. The preceding is not intended to be a recommendation or advice.

This information does not take into account the specific investment objectives, tax and financial condition of any specific person. This information has been prepared from sources believed reliable but the accuracy and completeness of the information cannot be guaranteed. This material and/or its contents are current at the time of writing and are subject to change without notice.

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