As the end of the year approaches, it’s important to review your retirement accounts and determine whether you need to take a Required Minimum Distribution (RMD). RMDs are annual withdrawals that the IRS generally requires individuals to take from certain tax-deferred retirement accounts, including traditional IRAs and most employer-sponsored retirement plans once they reach the applicable age. The amount you must withdraw is based on your account balance at the end of the previous year and your life expectancy, as determined by IRS guidelines. While some individuals may be eligible to delay their first RMD, most annual distributions must be completed by December 31 to avoid potential tax penalties.
Taking time to review your RMD requirements before year-end can help you avoid unnecessary penalties and better coordinate your retirement income and tax planning. Keep in mind that RMDs generally count as taxable income, and simply taking a distribution from one retirement account may not satisfy the requirements for another. If you’re unsure how much you need to withdraw or whether you’ve met your annual requirements, now is a great time to connect with your financial and tax professionals. Our team is here to help you navigate your retirement planning needs and work toward a confident finish to the year.