Before all the excitement, chaos, and family drama of the Holiday Season gets underway, be sure to double check your finances and if you are age 70 ½ years-old or more, Congratulations! You’ve hit a big milestone in your life. Although this one, may be unexpected if you didn’t prepare. Either way, the IRS will love you just the same.
We’ve put together some answers to frequently asked questions regarding Required Minimum Distributions, also known as RMD’s.
Question 1: What is an RMD?
Answer 1: After reaching age 70 ½ years-old, the IRS requires you to take distributions from your retirement accounts and IRA’s.
Question 2: Does this include Roth IRA’s?
Answer 2: No, a Roth IRA is not required to be drawn until the death of the owner of the account.
Question 3: When do I turn 70 ½?
Answer 3: Normally April 1 of the year following the later of the calendar year you either (1) reach age 70 ½ or (2) retire.
Question 4: What date do I need to take the distribution by?
Answer 4: In the year that you turn 70 ½ years-old, you have until April 1 of the following year to take your first RMD. After that, you need to take your RMD by December 31 each year.
Question 5: What if I do not take an RMD once reaching age 70 1/2
Answer 5: You may be subject to a penalty of up to 50% of the excess RMD over the actual amount distributed during a tax year.
Question 6: What if I just simply forgot to take an RMD by December 31? Can I take 2 RMD’s in the next year?
Answer 6: No, you can’t make up for a missed RMD from one year in the next year by taking two RMD’s. Rather, the IRS has the authority to waive the 50% penalty provided that you can establish the gap between the RMD and the amount actually distributed was due to reasonable error and steps are being taken to correct the missed RMD amount.
Question 7: How do I request the IRS waive the 50% penalty?
Answer 7: Complete Form 5322 and attach a statement of explanation.
An excellent article we like is “9 Things You Need To Know About Required Minimum Distributions (RMDs)” at https://www.retirementliving.com/all-about-required-minimum-distributions.
Additional information is available on the IRS website at this link https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions#1.
As always, Thank you for ready my blog,
Tina