3 New Required Minimum Distribution (RMD) Rules Everyone Must Know Before the End of 2024
One of the biggest benefits of saving in traditional retirement accounts like a 401(k) or IRA is the upfront tax break you receive. You won't owe any income taxes on contributions in the year you make them. That can give you extra cash now, enabling you to save more for retirement.
But you can't defer those income taxes forever. Eventually, Uncle Sam wants his cut. That's why the IRS imposes required minimum distributions, or RMDs. As the name implies, account holders subject to RMDs are required to withdraw a certain amount of money from their accounts. RMDs apply to anyone age 73 or older and may apply to inherited IRAs as well, regardless of the account holder's age.
The penalty for missing an RMD can be quite steep -- up to 25% of the amount you were supposed to withdraw -- and you'll still have to make the distribution and pay the income taxes on top of that. So, you don't want to miss making an RMD on time (usually by Dec. 31 of every year).
Source Fool.com
