Similar to a Traditional IRA or Traditional 401(k), the required minimum distributions are minimum withdrawal amounts that must be taken annually by the plan or IRA owner.
What are required minimum distributions?
RMDs are minimum withdrawal amounts that must be taken annually by the plan or IRA owner. RMDs must begin within the year the plan owner turns 70 and 1/2, or in the year of retirement if he or she retires after that age. IRA and Retirement plan participants and 401(k) owners are responsible for taking the correct amount of RMDs on time every year or may face stiff penalties. Roth IRA and Roth 401(k) owners do not have to take RMDs, as you should pay taxes on those contributed dollars. Calculating your RMDs is a collaborative effort between you and Rocket Dollar.
When are RMDs due? Are there any penalties?
- Your first RMD at 70 and 1/2 by December 31st of that year, then April 1 for years after that.
- An inherited IRA owner must take a distribution by the year after the owner's death on December 31st.
- If you are late to take an RMD, you could be subject to penalties from the IRS.