RMD's

[Tybee]

Question--I am not yet 73 and 1/2 but wanted to check from those of you who take RMD's from retirement accounts. Is that correct, that it is now up to age 73 and 1/2 when you have to begin taking them, not before?

I just looked at a table and it said 4.05% for age 73 so does that mean if you had 500000 in an IRA, you would need to take an RMD of $20,250 that year? And then whatever percentage for your age and the new balance of the IRA each year after that?

And does this also go for 401k balances?

[iris lilies]

Wait – is it 73 1/2 now that these RMD’s are required? Wasn’t it just recently 72 1/2?

I’m interested in how the RMD is calculated as well. I did a quick and dirty look at a chart a few weeks ago and it seemed like a lot of money has to come out but I am by no means convinced I did the calculation correctly.

[Tybee]

I might have read it wrong--so yeah, shout out to everyone for exactly what age is it, too?

[catherine]

I might have read it wrong--so yeah, shout out to everyone for exactly what age is it, too?

"Required Minimum Distributions (RMDs) are minimum amounts that IRA and retirement plan account owners generally must withdraw annually starting with the year they reach age 72 (73 if you reach age 72 after Dec. 31, 2022)." from the IRS

[Tybee]

I think Secure 2 changed that to 73? I think? Here's Schwab:

Timing of your first RMD

The timing of your first RMD is based on your age. After Secure 2.0, individuals turning age 73 in 2023 will need to take their first RMD distribution this year or by April 1 of the following year. The table below covers what you should know about start dates for different kinds of accounts.




Account type
Timing of first RMD


IRAs including traditional, SEP, and SIMPLE
April 1 of the following year after reaching RMD age


401(k), 403(b), 457(b) plans, or other qualified plan
April 1 of the following year after reaching RMD age. However, if you are still employed at your RMD age, you may be able to delay your first RMD until April 1 of the year after you retire. A few other caveats apply: The exemption applies only to the account for your most recent employer, the plan must allow this exemption, and you cannot own more than 5% of a business.


Roth IRA
RMDs are NOT required


Roth 401(k), 403(b), or 457(b) (designated Roth account)
April 1 of the following year after reaching RMD age. However, if you are still employed at your RMD age, you may be able to delay your first RMD until April of the year after you retire. This exemption only applies to the account for your most recent employer, that plan must allow this exemption, and you cannot own more than 5% of a business. Note: Beginning in 2024, RMDs will no longer be required from these accounts.


Inherited retirement accounts
If the deceased has not taken their RMD, you must generally take a distribution for them by December 31 of the year of death. Beneficiaries can get an extension to the tax filing deadline and potential penalty waiver. The heir of the account may also be subject to their own RMDs. The RMD rules for inherited accounts are very complex.

[jp1]

You might also be able to have the investment firm calculate it for you. That’s what I do with a small IRA I inherited from my father. I’ve got it set up to automatically send me the money each December. Just checked my bank and it appears that this year it was $.63. lol. Maybe I should just have the whole thing liquidated…

[iris lilies]

oh, OK, for me, it is age 73. I don’t know that that changes my overall giving plan, I guess it doesn’t.

[Tybee]

Catherine, I think I misread what you posted, sorry, and I think you answered it clearly. So I am going to assume since I haven't turned 72 yet, it is now 73 in my case and for anyone who hasn't turned 72 by last year. Thank you.

Is it 401k's as well, but not Roth IRA's or Roth 401k's?

JP1, I inherited a couple of thousand dollars from an IRA this year and my mother's trust officer said it was simpler to just cash it in, so that is what I did.

[iris lilies]

Agreed, cashing it out is often the way to go. We did that for both parental IRAs we inherited.