RMDs are required minimum distributions investors must take every year from their retirement savings accounts, including traditional IRAs, and employer-sponsored plans such as 401(k)s, and Roth 401(k)s, starting at age 72.
If you’re turning 72 in 2021 and taking your first RMD, you have until April 1, 2022, to do so. For each subsequent year, your RMD must be taken by December 31. Keep in mind, if you delay your initial RMD until April 1, you’ll be responsible for 2 withdrawals that year (one by April 1 and one by December 31), which could result in a larger tax liability.
If you’re older than 72, you must take your RMD by December 31 each year.
Note: Roth IRAs aren’t subject to RMDs.
It’s very important to withdraw your RMD on an annual basis. If you forget, you’ll face a 50% penalty tax on any amount not withdrawn.
Last year, the RMD age increased from 70½ to 72 and RMDs were waived by the CARES Act. There is no longer an RMD waiver for 2021. As a result, anyone age 72 or older as of December 31, 2021, must take their RMD by year-end to avoid the 50% penalty―unless this is their first RMD, in which case they have until April 1, 2022.
CONTACT US TODAY if you have any questions or need help with the preparation of your tax returns.
Sincerely,
Maryna Varabyova, CPA
(877) 677-3737
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