A reader of NJ Money Help asked when they would be required to take their first Required Minimum Distribution (RMD) after turning age 72.
In his response, Howard Hook, CFP®, CPA, CAP®, explained that Congress had recently changed the RMD age from 72 to 73. As a result, someone turning 72 in 2023 would not have their first RMD year until 2024.
Hook outlined how RMDs are calculated, explaining that individuals must use the December 31 account balance from the prior year and the appropriate life expectancy factor from IRS Publication 590-B. He noted that the Uniform Lifetime Table is generally used unless a spouse is more than 10 years younger, in which case the Joint Life Expectancy Table may apply.
He also explained that multiple IRA accounts can be aggregated for RMD purposes, allowing the distribution to be taken from any of the IRAs. However, workplace retirement plans cannot be aggregated with IRAs and must be calculated and satisfied separately.
Hook further noted that, for the first RMD year only, individuals have until April 1 of the following year to take the distribution. In the reader’s case, a 2024 RMD could be delayed until April 1, 2025. However, doing so would still require the 2025 RMD to be taken by December 31, 2025, potentially resulting in two distributions in the same year.
To read Howard’s full response, visit the original article on NJMoneyHelp.com: When Do I Have to Take My First IRA Distribution?
Putting It Into Perspective
Required Minimum Distribution rules can be confusing, especially when Congress changes the age requirements or when individuals have multiple retirement accounts. Understanding when distributions must begin and how they are calculated can help retirees avoid costly mistakes and stay on top of important retirement planning deadlines. It’s also important to remember that RMDs can affect your taxable income and overall retirement income planning. Therefore, it’s highly recommended that you speak with a financial planner about your retirement plan.
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