If you turned 72 in 2022, the last chance for your first required minimum distribution is April 1 or you may face a 25% tax penalty.
Brett Koeppel, a certified financial planner and founder of Eudaimonia Wealth in Buffalo, New York, said Secure 2.0 has added to the confusion of who needs to take money out of retirement accounts and when.
Although Secure 2.0 raised the beginning age for RMDs to 73 starting in 2023, retirees who turned 72 in 2022 still must withdraw the funds by April 1 to avoid a "very steep" penalty, Koeppel said.and other workplace plans, along with most individual retirement accounts. There are no RMDs for Roth IRAs until after the account owner's death.
The amount you need to withdraw annually for RMDs is typically calculated by dividing each account's prior Dec. 31 balance by a "distribution period"If you skip your RMD or don't take out enough, there's a 25% penalty, levied on the amount you should have withdrawn. Secure 2.0 dropped the penalty to 25% from 50% starting in 2023, with the possibility of reducing it further to 10% if you take your missed RMD during the "correction window.
The correction window is typically the end of the second tax year following the year of the missed RMD, explained George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts.
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