Required Minimum Distributions represent the minimum amount individuals must withdraw from their pre-tax retirement accounts each year starting at age 73. RMDs are mandated by the IRS to ensure that retirement savings are taxed during an individual’s lifetime. The RMD amount is determined by dividing your account balance by a lifetime expectancy factor from the IRS. Fortunately, most financial institutions will kindly supply you with the exact amount and date needed to take your withdrawal by, or calculators can easily be found online.

Given recent changes to the regulations, we are going to highlight some of the IRS updates regarding RMDs. The first major change is the new RMD age, now 73, with a scheduled increase to 75 in 2033. Your RMD must be taken by April 1st of the year following the year of when you turn age 73. Subsequent RMDs must be taken by December 31st of each year.

Another important update is Roth 401(k)’s are exempt from RMD’s beginning this year, aligning their rules with those of Roth IRA’s. Both accounts are exempt from RMD distributions for the owner’s lifetime.

A key exemption that remains unchanged is for those who are still employed. If you don’t own 5% or more of the company and are age 73 or older, you may defer taking RMD’s from your employer plan until you retire.

If you happen to be a non-spousal IRA beneficiary after January 1st, 2022, you are responsible for withdrawing all funds from the inherited account within 10 years of receiving the inheritance. The IRS allows you to skip annual RMD’s as long as the inherited account is fully depleted within a 10-year time frame – a notable departure from the previous life expectancy rules.

Lastly, the limit for qualified charitable distributions has gone up to $105,000 in 2024, which can be applied toward an individual’s RMD. Up to $53,000 of this amount can be used to establish a charitable trust or gift annuity. These qualified charitable distributions are also excluded from one’s taxable income. Once your donation is made, a charitable gift annuity will provide a fixed income stream for life. As interest rates seem to be staying higher for longer, this has increased the appeal of charitable gift annuities for retirees seeking higher annual income. 


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