The Internal Revenue Service (IRS) reminds retirees to make the required withdrawals from their retirement plans. This is because the retirement plans have a year-end deadline. As a result, retirees must withdraw all necessary funds before the deadline.
This warning is especially important for retirees 73 and older. Remember that this deadline applies not only to individual retirement arrangements (IRAs), but also to other types of retirement plans. The IRS also emphasized the updates made by the SECURE 2.0 Act.
Why should retirees aged 73 or older take the required minimum distributions set by the IRS?
The Internal Revenue Service defines a required minimum distribution (RMD) as the amount of money that retirees with IRAs or other retirement plans must withdraw each year.
The IRS considers these distributions or withdrawals taxable income. As a result, if you do not make these withdrawals when they are due, you may face penalties.
This means you can’t keep retirement funds in your retirement plan account indefinitely. When retirees reach the age of 73, they must begin taking distributions from their IRAs (SEP IRA, SIMPLE IRA, or other retirement savings plan accounts).
What does the IRS say about Roth IRAs?
Actually, the Internal Revenue Service claims that you are not required to withdraw funds from Roth IRAs. It is the same with Designated ROth accounts in a 403(b) or 401(k) plan.
Of course, this is only valid for the duration of the account owner’s life. Nonetheless, if you are the beneficiary of a Roth IRA or a Designated Roth account, you must meet certain minimum distribution requirements.
As a beneficiary, you must follow these withdrawal rules. Don’t forget that RMD is just the minimum amount of money you must withdraw each year. Of course, you can get more money if you need it, as long as you pay the IRS-mandated taxes on taxable income.
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