RMD Table Insights: Simplifying Your Retirement Planning
Once you reach a certain age, the IRS requires annual withdrawals from your retirement savings, known as Required Minimum Distributions (RMDs). These withdrawals ensure taxes are eventually paid on tax-deferred accounts like 401(k)s and IRAs. The IRS uses an RMD table to determine the amount you need to withdraw each year, factoring in both your age and account balance.
The Required minimum distributions table provides a clear method to calculate your required withdrawals. Ignoring these rules can lead to significant penalties, so it’s crucial to follow them correctly. At Dimov CPA, we help you navigate these regulations and avoid costly mistakes.
RMD Table
The RMD table divides your retirement account balance by a life expectancy factor based on your age. Here’s a portion of the table:
|
Age |
Life Expectancy Factor |
|
72 |
25.6 |
|
75 |
22.9 |
|
80 |
18.7 |
|
85 |
14.8 |
|
90 |
11.4 |
As you age, your life expectancy factor decreases, which increases the required distribution. Dimov CPA offers personalized guidance to ensure you meet your RMD requirements.
RMD Deadlines and Penalties
You must take RMDs by December 31 each year, starting when you turn 72 (or 73 with new legislation). You can delay your first RMD until April 1 of the following year, but delaying results in two RMDs in one year. Missing deadlines can trigger a 50% penalty on the amount not withdrawn, though the IRS offers penalty waivers for certain situations if you submit the proper forms.
Frequently Asked Questions
What is an RMD table?
The RMD table is used to calculate the required minimum distribution based on your age and retirement account balance.
How does the Required minimum distributionstable work?
The Required minimum distributions table divides your account balance by a life expectancy factor based on your age to determine your annual withdrawal.
Does the RMD table apply to all retirement accounts?
The RMD table applies to traditional IRAs, 401(k)s, and similar tax-deferred accounts, but not Roth IRAs during your lifetime.
