#2 Verify the Minimum Distributions That Must Be Taken From Your Retirement Accounts
According to US tax law, individuals must begin taking distributions from their individual or employer-sponsored retirement savings when they reach a specified age. The SECURE Act of 2019 raised the retirement age from 70 12 to 72 for anyone turning 70 after December 31, 2019.Â
These distributions are necessary for pensions, profit-sharing plans, conventional IRAs, and 401(k) plans. They are not required while the owner of the Roth IRA is still alive.Â
RMDs are determined by totaling the funds in your retirement funds and multiplying the result by an IRS life expectancy calculation. A straightforward calculator that uses the most recent IRS life expectancy tables is offered by the Securities and Exchange Commission.
You are responsible for ensuring that you receive the correct amount of RMDs, even though the retirement plan administrator is required to obey tax law in this regard. You will pay the toughest IRS penalty available, which is 50% of the shortfall if you don’t meet the RMD requirements.
Accordingly, if you were supposed to take $20,000 but only got $10,000, you will be subject to a staggering $5,000 penalty. Verify your RMD for 2022 again, and if necessary, withdraw additional funds.
