The Internal Revenue Service (IRS) has issued a reminder that most retirees who turned 73 this year must begin taking Required Minimum Distributions (RMDs) from their retirement accounts by Tuesday, April 1, 2025. This includes distributions from Individual Retirement Arrangements (IRAs), 401(k)s, and similar workplace retirement plans.
Special Rule for First-Time RMDs
Typically, RMDs must be taken by December 31 each year, but there’s an exception for those turning 73 in 2024. If you fall into this category, you can delay your first RMD until April 1, 2025. However, this rule applies only to individuals born after December 31, 1950.
Double RMDs in 2025?
If you choose to delay your first RMD until April 1, 2025, keep in mind that you will still need to take your second RMD by December 31, 2025. This means you could end up with two taxable RMDs in the same year, both of which must be reported on your 2025 tax return.
Retirement Accounts Subject to RMD Rules
RMD rules apply to a variety of retirement accounts, including:
- Traditional IRAs
- Simplified Employee Pension (SEP) IRAs
- Savings Incentive Match Plan for Employees (SIMPLE) IRAs
- 401(k), 403(b), and 457(b) plans
However, Roth IRAs are not subject to RMDs while the original owner is alive.
How RMDs Are Calculated
If you have an IRA, your trustee or plan administrator must notify you of your RMD amount or offer to calculate it for you. You can find your RMD amount listed on Form 5498 (IRA Contribution Information) in Box 12b. For those required to take an RMD for 2024, the amount will be on the 2023 Form 5498, typically issued in early 2024.
Who Can Delay RMDs?
While most retirees must take their first RMD by April 1, some workplace retirement plan participants may be able to postpone their RMDs until after they retire—if their specific plan allows it. This exception, however, does not apply to:
- Business owners with at least 5% ownership
- Participants in SEP and SIMPLE IRA plans
For more details on excess accumulation taxes and RMD deferrals, refer to IRS Publication 575 (Pension and Annuity Income).
Additionally, public school employees and certain tax-exempt organization staff with pre-1987 403(b) plan accruals should check with their employer or plan administrator for guidance on how to handle their distributions.
Final Thoughts
If you turned 73 in 2024, make sure you plan ahead for your RMDs to avoid tax surprises. Whether you take your first RMD before the April 1, 2025 deadline or wait, understanding your distribution requirements can help you manage your retirement income more effectively.
For further information, visit the IRS website or consult with Morris and Associates to ensure compliance with RMD rules.
Get Help Filing Your Taxes
