A looming deadline for Individual Retirement Arrangement (IRA) holders is approaching, with December 31 being the last day to avoid late penalties. If you’re 73 or older, it’s mandatory to take annual withdrawals from your IRA accounts to avoid paying a fee, which includes 25% of the Required Minimum Distribution (RMD) plus other taxes.
College of Charleston senior instructor and certified public accountant Thomas Spade is busier than usual with tax deadlines approaching. “An RMD is calculated based on how much is in your account and how old you are,” he explains. For traditional IRAs and IRA-based plans, withdrawals occur every year once individuals reach age 73, regardless of their employment status.
However, not all retirement plans require RMDs. Employer-sponsored plans have delayed deadlines until retirement unless the participants own more than 5% of the sponsoring business. Roth IRAs also don’t have RMD requirements.
Spade warns that procrastination can lead to missed opportunities. “The most common mistake is waiting until the last minute to call and tell them they need to take their RMD.” To avoid this, it’s recommended to contact your IRA handler now to ensure timely withdrawal.
Additionally, changes are coming in 2026 and later, including an increase in the age for required minimum distributions under Secure Act 2.0, set to reach age 75 by 2033. Until then, the deadline remains December 31.
Source: https://www.live5news.com/2024/12/19/deadline-withdraw-your-retirement-account-fast-approaching