Retirement Blog

Are you prepared for RMDs?

February 3, 2022

RMD

Did you know your retirement income could take a tax hit due to required minimum distributions (RMDs)?

Here are a few things you should know:

  • Under the 2019 legislation, if you turned 70 ½ in 2019, then you should have taken your first RMD by April 1, 2020. If you turned 70 ½ in 2020 or later, you should take your first RMD by April 1 of the year after you turn 72. All subsequent ones must be taken by December 31 of each year.1
  • The RMD is taxed as ordinary income, with the top ordinary income federal tax rate of 37% for 2021 and 2022.1
  • Taking two RMDs in one year can have important tax implications, potentially pushing you into a higher tax bracket.1
  • To calculate your RMD, divide your year-end account balance from the previous year by the IRS life-expectancy factor based on your birthday in the current year.1
  • You could get hit with a 50% penalty for missing your deadline.1

The good news is there are steps you can take to protect your savings from unnecessary penalties! You can find answers to common RMD questions here. We can also offer guidance by helping to develop an ideal withdrawal strategy for you. Feel free to reach out with any questions you may have!

1. https://www.kiplinger.com/retirement/retirement-plans/required-minimum-distributions-rmds