Were you born in 1952?

Pamela Rivers |

If you’ll be turning 73 years young in 2025 and you have a tax-deferred retirement account, it is time to read up on Required Minimum Distributions (RMD).

  • The IRS requires that you begin taking RMDs from certain retirement accounts in the year you turn 73. If you are still working, consult your accountant.
  • This applies to Traditional, SEP and SIMPLE IRAs, 401(k), 403(b) and 457(b) plans.
  • This does not apply to Roth IRAs.
  • There is some flexibility with your first RMD. For those of you born in 1952, you have until April 1st of 2026 to take your first RMD. If you delay taking it until 2026, you will have to take both a 2025 RMD and a 2026 RMD in the same year.

 

Here are the most common questions I get asked about RMDs:

Why do I need to do this and will I have to take an RMD every year?

  • These assets have never been taxed. The IRS requires the distribution so the assets can be counted as taxable income in the calendar year they are distributed. The custodian of your account should offer tax-withholding as an option. And yes, you will need to take an RMD every year.

Which account should I take it from?

  • This depends. If you have more than one relevant retirement account, you may decide to take funds from each account or all from one. It is best to consult with your financial professional to decide how to handle this. 

How do I know how much to take?

  • The RMD based on the prior year’s December 31st value divided by a life expectancy figure issued by the IRS every year. The custodian of your retirement account should be able to provide you with the RMD amount. The internet also has plenty of RMD calculators you can access.

What happens if I do not take it and is there any way around it?

  • The IRS can assess a penalty for 25% of the amount that you did not take. You can consider a Qualified Charitable Distribution (QCD). This involves donating the funds to an eligible charity. The IRS considers the requirement for the distribution met but the funds are not considered taxable income. There are rules that come along with a QCD so always be sure to consult a financial professional first.