IRS issues RMD reminder to retirees

The Internal Revenue Service (IRS) has reminded taxpayers that some retirees must begin receiving payments from Individual Retirement Accounts (IRAs) and similar workplace retirement plans by Tuesday, April 1, 2025. This requirement applies to retirees who turn 73 in 2024. Required Minimum Distributions (RMDs) are typically made at the end of the year, but there is a special rule for those who turn 73 in 2024. They can delay their first RMD until April 1, 2025. This rule applies to IRA owners and participants born after December 31, 1950. The deadline for the first RMD is April 1, 2025, but for subsequent years, the distribution is due by December 31. Taxpayers who receive their first mandatory distribution for 2024 in 2025 must request their second RMD for 2025 before December 31, 2025. The first distribution is taxable in 2025 and must be reported on the 2025 tax return, along with the regular 2025 distribution. RMD rules apply to traditional IRAs, Simplified Employee Pension (SEP), and Savings Incentive Match Plans for Employees (SIMPLE) account holders while the original owner is alive. They also apply to 401(k), 403(b), and 457(b) plan participants.

Irs reminder on RMD deadlines

However, Roth IRAs are not subject to the required minimum distributions. The IRA trustee must inform the IRA holder of the required distribution amount or offer to calculate it. The RMD amount generally appears on Form 5498, IRA Contribution Information. For a 2024 distribution due before April 1, 2025, the amount is shown on Form 5498 for 2023, which is generally issued in early 2024. While the April 1 deadline applies to all traditional IRA account holders and most workplace retirement plan participants, some people with workplace retirement plans can defer their RMD. In most cases, participants can wait until April 1 after retirement to receive their distributions if their workplace plan allows it. This exception does not apply to business owners with a 5% interest or participants in SEP and SIMPLE IRA plans. Employees of public schools and staff of specific tax-exempt organizations with pre-1987 403(b) plan accumulations should check with their employer, plan administrator, or provider for specific guidance on managing these accumulations. Publication 575, Pension and Annuity Income, provides additional details on the excess accumulation tax for those who fail to meet the RMD requirements. Retirees and participants are encouraged to review their plans and ensure they meet all necessary deadlines to avoid potential penalties.