https://www.fool.com/retirement/2025/01/06/3-required-minimum-distribution-rmd-rule-changes-e/
Please read more at the above link
- Several major RMD rule changes went into effect over the last few years as a result of the SECURE Acts.
- Not knowing the new rules could leave you with a higher tax bill.
- Most of the new rules help retirees reduce their RMDs.
- The $22,924 Social Security bonus most retirees completely overlook
You could be leaving money on the table or face stiff penalties if you don’t know these rule changes.
Contributing to a 401(k) or IRA is one of the best ways to save for retirement. The government will give you a tax deduction equal to your contribution every year you add money to one of those accounts. On top of that, the account won’t incur any taxes on dividends or capital gains while the funds stay in the account. That can encourage investors to keep their money in a retirement account of some sort as long as possible.
However, eventually, the government wants to collect its tax revenue. That’s why it imposes required minimum distributions, or RMDs, on traditional 401(k) and IRA accounts. Once you reach a certain age — currently age 73 — the IRS requires you to withdraw some of your retirement savings each year and pay the income taxes on it. If you inherited an IRA from someone subject to RMDs, you may be required to continue taking RMDs yourself.
The penalty for missing an RMD can be up to 25% of the amount you were supposed to withdraw. Plus, you’ll still need to withdraw the correct amount and pay the income taxes on that withdrawal. So, knowing all the rules is key. The rules for RMDs have changed significantly over the past few years, and 2025 will see a few more changes that everyone needs to know.