Key RMD Reminders

You have an important financial milestone coming up! The year you turn 73 is deemed by the IRS your “first distribution year.” This means you must start taking required minimum distributions (RMDs) from any qualified retirement accounts you hold, including IRAs, 401(k)s, 403(b)s, profit-sharing plans, and other defined contribution plans.

Here are the important dates to know as you begin to take RMDs.

• You must take your first RMD by April 1 of the year following this half birthday. If you don’t, you’ll face a 50% excise tax on the amount not distributed.
• Subsequent RMDs are due by year-end of each year. Note that postponing the first RMD results in the need to take both the first and second RMDs by December 31 in the same tax year.
• If you don’t need the RMD to cover current living expenses and you want to avoid paying higher taxes or increasing Medicare insurance premiums, you can use the qualified charitable distribution (QCD) by the end of the year:

- Instead of taking an RMD, a qualified charitable distribution permits a direct transfer of up to $105,000 from your IRA to a qualified charity.

- Qualified charitable distributions automatically satisfy RMDs for the year when it’s made, which is a real advantage for charitable-minded IRA owners who don’t need RMDs to live on.

- It’s important to remember that funds that have already been distributed to you and are then contributed to charity don’t qualify as a qualified charitable distribution.

If you have questions about RMDs or qualified charitable distributions, or need assistance with year-end financial and tax strategy, don’t hesitate to call and schedule time to talk.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to be used in lieu of specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.