Beginning Monday June 24th, we will begin painting the inside of our building. Learn More
arrow icon drop icon search icon cross icon Heritage Grove mountain curve (desktop) Heritage Grove mountain curve (mobile) Heritage Grove green hill tree

Financial Planning, IRAs, Retirement, Taxes |

What You Need to Know About Required Minimum Distributions

If you’re turning 73 in 2024, you’ll want to be aware of your required minimum distribution (RMD) requirements.

Your RMD is the minimum amount you must withdraw from your qualified retirement account each year. This applies to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs. Roth IRAs do not require withdrawals until after the death of the account owner.

If you own more than one IRA account, you must calculate the RMD separately for each IRA, but you can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract, but can take the total amount from one or more of the 403(b) contracts.

RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans, must be taken separately from each of these plan accounts.

Be aware:

  • You can withdraw more than the minimum required amount.
  • Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
  • The required beginning date for RMDs is April 1st of the calendar year following the year you turn 73.

Many opt to take their first RMD by December 31 of the year they reach 73, because if you wait until April 1 of the following year, you will need to take your second RMD by December 31, 2025—hence, two distributions in one year that you will owe taxes on. For example, you turn 73 in June of 2024. You may delay your first RMD to April 1, 2025, however, you will need to take a second RMD by 12/31/2025.

Every year, the RMD from an IRA is calculated by dividing the IRA balance as of December 31st of the preceding calendar year by the applicable life expectancy factor from the IRS tables. You can find the tables at the IRS website.

Don’t forget to take your annual RMD as you will face substantial penalties for noncompliance. If you have any questions, please see your tax or investment advisor.

green mountain blog post footer image

Related Posts

Cybersecurity, Financial Fitness, Online SecurityProtect Yourself: Mobile Deposit and Fraudulent Checks

Check fraud is just as prevalent as other types of fraud,...

Auto Loans, Home Loans, PromotionAuto Refinance and Home Equity Promotions – June 2024

Give yourself a solid start this spring with our auto loan...

Budgeting, Financial Fitness, Financial Planning, RetirementClose To Retirement? Here’s What You Should Know

If you are 18 to 24 months away from retirement, this...

We're Heritage Grove Federal Credit Union. We're here to help you stand tall, to offer great solutions and sound financial advice. We want to help you achieve your financial goals, and we look forward to serving you. Call us at 503-588-0211 or 1-877-695-8321 with questions, any time!