IRS Rules for RMDs: Deadlines, Calculations, and Key Considerations for Retirees

Required Withdrawals from IRAs and 401(k)s?

Retirees who turn 73 in 2024 are required to begin taking Required Minimum Distributions (RMDs) from their retirement accounts by April 1, 2025. These accounts include IRAs, 401(k)s, and other similar workplace retirement plans. This rule helps ensure compliance with tax laws and avoid any penalties.?

First RMD Deadline?

• Individuals who turned 73 in 2024 must take their first RMD by April 1, 2025.?

• Future RMDs are due annually by December 31.?

Double Distributions in One Year?

• If the first RMD is delayed to 2025, retirees must take two distributions that year (the 2024 RMD by April 1 and the 2025 RMD by December 31).?

• Both distributions will be taxable and reported on the 2025 tax return.?

Retirement Accounts Requiring RMDs?

• RMD rules apply to:?

• Traditional IRAs.?

• SEP and SIMPLE IRAs.?

• 401(k), 403(b), and 457(b) plans.?

• Roth IRAs are exempt from RMDs.?

Calculating RMD Amounts?

• RMDs are calculated based on:?

• The account balance as of December 31 of the previous year.?

• Life expectancy tables provided by the IRS.?

• IRA trustees are required to inform account holders of the RMD amount.?

Special Exceptions and Considerations?

• Deferral for Certain Workplace Plans?

• Participants in workplace retirement plans may defer RMDs until April 1 following retirement, provided their plan allows it.?

• Exceptions do not apply to SEP or SIMPLE IRAs or individuals owning more than 5% of the business.?

• Special Rules for Public Sector Employees?

Employees with pre-1987 accruals in certain 403(b) plans may have different RMD requirements. They should consult their plan administrators for guidance.?

IRS Resources for Assistance?

The IRS offers tools and publications to help retirees understand and calculate their RMDs:?

• Publication 590-B: Includes worksheets, examples, and life expectancy tables.?

• RMD FAQs: Available on the IRS website for common questions.?

• Taxpayers can use these resources to ensure compliance and accurate RMD calculations.?

Retirees must adhere to RMD rules to avoid significant penalties. Proper planning can help reduce the tax impact of double distributions in one year.?

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