TAX RESOURCE CENTER
With your retirement accounts, you will want to make sure you understand the required amount to withdraw from your account as well as the date your withdrawal must be completed by every year to avoid a 50% penalty from the IRS. In the year of your first Required Minimum Distribution (RMD) (generally, the year you turn 72), you have until April 1 of the following year to withdraw it. After the first year you reach age 72, and for every year after, you must take your RMD by December 31. However, if you turned 70½ in 2019 or prior, you must continue to take your RMD as scheduled.
The IRS has online resources that can help. IRS Publication 590-B covers IRA distributions including the RMD. Visit IRS.gov.
Traditional IRA, SEP IRA, SIMPLE IRA, & all employer retirement plans
Roth IRA withdrawals are not required until after the death of the account owner.
Generally, required minimum distributions are taxed as ordinary income, except for any money that has already been taxed as non-deductible contributions, or that can be received tax-free.
Failing to withdraw or making withdrawals that are less than the required minimum distribution is subject to an IRS penalty of 50% of the amount that was not withdrawn.
When you inherit a retirement account, you need to calculate the required minimum distribution for the account inherited. The options vary based on if you are the sole beneficiary of your spouse's account or someone else. In addition to the options below, an owner's surviving spouse and sole beneficiary has the option to transfer an IRA to the spouse's own IRA and treat it as his/her own. Options for taking required minimum distributions include:
If original owner dies before required beginning date
If original owner dies after required beginning date
Spouse: Begin taking RMDs no later than December 31 of the year in which the owner would have turned 72, or the year following the owner's death based on your single life expectancy. Use the Single Life Expectancy Table, each year, to determine the factor to use based on your age. Spouse has option to roll to own IRA.
Non-spouse: A full distribution of the account must be made by December 31 of the tenth year following the year of the owner’s death. There are no annual distributions required. This changes in 2023, annual distributions will be required if the owner dies post required beginning date. Pre required beginning date beneficiary can elect the 10 year rule without annual distributions.
Calculating Required Minimum Distributions can be tricky. At Thrivent Mutual Funds, we recommend you consult your tax advisor. Thrivent Mutual Funds and their representatives cannot provide legal or tax advice.
1 5%+ owners of business sponsoring retirement plan must start RMDs by April 1 following the calendar year in which they reach age 72 regardless if there is a delayed retirement provision. However, if you turned 70½ in 2019 or prior you must continue to take your RMDs as scheduled.