After being waived for 2020, Required Minimum Distributions (RMDs), which are amounts you must take each year from most retirement accounts once you reach a certain age, are happening again in 2021. Make sure you don’t overlook taking these distributions from your retirement account.
Last year, the RMD age changed to 72 from 70½ and new IRS life expectancy tables are to go into effect next year. Anyone born July 1, 1949, or after can wait until 72 to take their required distributions.
In a recent CNBC article, they stated “The amount you must withdraw each year is generally determined by dividing the balance of each qualifying account by a “life expectancy factor” as defined by the IRS. And, if you already were taking RMDs before 2020 (you had already reached age 70½), you would simply resume those distributions this year, using the current life expectancy tables, your age and your account balance at the end of 2020.”
Also included in the RMD data is that if you turned 70½ in the first half of 2019 and planned to take advantage of the April 1, 2020, deadline for taking out the RMD — and did not do it — it must be taken by December 31. That being said, if you turn 72 this year, you have until April 1st 2022 to take your 2021 RMD.
“There are also withdrawal rules to take into account. For inherited IRAs, 401(k) plans or other qualified retirement accounts, the balance must be entirely withdrawn within 10 years if the owner died after 2019, unless the beneficiary is the spouse or other qualifying individual. The 2019 Secure Act eliminated the ability of many beneficiaries to stretch out distributions across their own lifetime if the original account owner died on Jan. 1, 2020, or later,” according to an article by CNBC.
The specifics of RMDs can seem complicated, so if you have any questions about whether or not you are eligible or other concerns relating to your required retirement withdrawals, send us an email at email@example.com and we are happy to further explain it for you.