Retirement Alert: RMDs are Back in 2021
Required minimum distributions (RMDs) – the amount you must withdraw from certain retirement accounts when you reach a certain age – are back in 2021, after being waived in 2020.
RMDs apply to 401(k)s and individual retirement accounts (except Roth IRAs). The amount that must be withdrawn each year is calculated by dividing the balance of the account by a life expectancy factor, which is determined by the IRS. (View this worksheet to calculate your RMD).
When you are required to begin making required minimum distributions has shifted a bit. Those who reached age 70½ before 2020 were required to start taking the withdrawals then. But those who reached that age during 2020 – or, to be clearer, anyone born July 1, 1949 or later – can wait until age 72 to begin withdrawals.
RMDs can be delayed to April 1 of the year following the year you reach RMD age, but must be taken by December 31 in each of the following years. Failure to do so could mean a 50 percent penalty.
Importantly, if you are still working and contributing to a retirement plan sponsored by an employer, you do not need to take an RMD until you retire.
For questions about this, or any other related manner, contact your Weiss tax professional at your convenience.
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