As the year draws to a close, we would like to remind retirees to make Required Minimum Distributions (RMDs) from retirement plans. RMDs must be made before December 31st.
RMD rules apply to all employer sponsored retirement plans, including profit sharing plans, 401(k) plans, 403(b) plans, 457(b) plans, Roth 401(k)s, traditional IRAs, and IRA based plans such as SEPs, SARSEPs, SIMPLE IRAs. However, the RMD rules to do not apply to Roth IRAs while the owner is alive.
RMDs must begin by April 1st following the year you turn 70 ½. Every year after that, funds must be withdrawn by December 31st. If you fail to take the RMD or your withdrawal is under the minimum required amount, you may have to pay a 50% excise tax on the amount not distributed.
There are numerous other rules related to RMDs that we can explain. If you have questions about RMDs, please give us a call at 616.393.0398.