CHARLESTON, S.C. (WCSC) – The clock is ticking on taking your Required Minimum Distributions from Individual Retirement Arrangements. The last day of the year is the deadline.
If you are 73 or older you have to withdraw annually from IRA accounts to avoid paying a fee. It’s 25% of the RMD plus other taxes you might owe.
It’s a busy time of year for accountants like College of Charleston senior instructor and certified public accountant, Thomas Spade, as those tax deadlines approach. Tax professionals work diligently to manage thousands of RMD accounts before the end of the year. Spade explained an RMD is calculated based on how much is in your account and how old you are. IRA withdrawals from traditional IRAs and IRA-based plans occur every year once people reach age 73, even if they’re still employed.
As for retirement plans, the RMD rules apply to employer-sponsored plans, with delays allowed until retirement unless the participants own more than 5% of the sponsoring business. No RMDs are required for Roth IRAs
Spade says while it all can get complicated. Some common mistakes are easy to avoid, like forgetting to withdraw or waiting until it’s too late.
“The most common one is that people wait until the last minute to call the place that is handling their IRA and tell them they need to take their RMD. Sometimes if they don’t call soon enough then they simply can’t process it by Dec. 31,” Spade says.
Spade says now is the time to call the person handling your account and get your RMD taken out if you haven’t yet. In the future, he recommends taking it out in January so that it’s out of the way for the year and you don’t need to worry about it.
Spade added not only can this all be confusing, but it also changes a lot. There are provisions that are going to start in 2026 and even later. The age for required minimum distributions is set to increase under Secure Act 2.0 to age 75 by the time we reach 2033.
The deadline to withdraw your required minimum distribution is Dec. 31.
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