Baby boomers who were born in 1950 or earlier have an important upcoming deadline for required minimum distributions to avoid penalties.
Required minimum distributions, or RMDs, are minimum amounts that many retirements plans, and IRA account owners must generally withdraw annually after they reach age 72.
Account owners can delay taking their first RMD until April 1 of the following calendar year which they reach age 72 or, in a workplace retirement plan, retire. RMDs are taxable income and may be subject to penalties if not timely taken.
IRAs: The RMD rules require traditional IRA, and SEP, and SIMPLE IRA account holders to begin taking distributions at age 72, even if they're still working. Account holders reaching age 72 in 2022 must take their first RMD by April 1, 2023, and the second RMD by December 31, 2023, and each year thereafter.
Retirement Plans: In 401(k), 403(b) and 457(b) plans; profit-sharing and other defined contribution plans; and defined benefit plans, the first RMD is due by April 1 of the later of the year they reach age 72, or the participant is no longer employed (if allowed by the plan). A 5% owner of the employer must begin taking RMDs at age 72.
RMDs may not be rolled over to another IRA or retirement plan.
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