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Updates to the Required IRA Distributions (RMD's)

March 01, 2024

Well, the regulations have once again changed regarding the minimum distributions from retirement accounts.  As you know, once you reach a specific age, you are required to start withdrawing from your traditional IRA, traditional 401(k), and a number of other employer-sponsored retirement plans. In 2024, the age to start taking RMDs is 73.  HOWEVER, if you are still employed at age 73 or older, you do not have to take an RMD on your traditional 401(k) or similar retirement plan at the employer where you currently work. You do owe RMDs on any other traditional 401(k)s, IRAs, or similar tax-advantaged plans that you own.  And please don’t forget that if you have inherited a retirement account, it’s still subject to an RMD.  Although the original owner of a Roth IRA is are not subject to RMDs, those who inherit the Roth will have to take them.

While your first RMD can be delayed until April 1 of the year after you turn 73, subsequent RMDs must be taken by Dec. 31 of each year. This means that if you delay the first RMD until the following year, you'll have to take two RMDs in that year.

Failing to take the required RMD amount by the deadline can result in a substantial penalty.  With the new SECURE Act 2.0, effective this year, this penalty has been reduced to 25% of the minimum amount that should have been withdrawn but wasn’t.

Note that withdrawals from a traditional retirement account are generally taxable as ordinary income; but distributions from a Roth IRA are generally not taxable if inherited, or if you are the original owner and have reached age 59 ½ and your first deposit into the Roth was 5 years ago.

Each year your RMD must be calculated based on the balance in your relevant retirement accounts on 12/31 of the prior year (i.e., for 2024, it is the balance on 12/31/23) divided by a “life expectancy factor” that the government provides.  If your retirement account is with Alloy Silverstein we will calculate what you owe and help you set up the best way for you to do the distribution based on your cash flow needs.

There are a couple ways to compute the RMD using the IRS tables.

  • The Single Life Expectancy Table is used by beneficiaries who are not the spouse of the IRA owner.
  • The Joint Life and Last Survivor Expectancy Table is used by married individuals whose spouses are more than 10 years younger and are the sole beneficiary of the account.
  • The Uniform Lifetime Table is used by unmarried retirement account owners calculating their own withdrawals, married individuals whose spouses aren’t more than 10 years younger, and married individuals whose spouses aren’t the sole beneficiaries of their retirement account. This is the Table used most often.

Finally, if you contribute to any qualified charities, and you are required to take an RMD, then you should consult your adviser about making these contributions directly from your IRA to help you avoid taxes on the distributions.  Please call us if you wish to discuss this.