If you’ve spent years saving for retirement in tax-deferred accounts like IRAs or 401(k)s, there’s an important IRS rule to know about as you reach your 70s: Required Minimum Distributions (RMDs).
What Are RMDs?
RMDs are the minimum amounts you must withdraw each year from your retirement accounts once you reach a certain age — even if you don’t need the money.
RMDs apply to —
• Traditional IRAs
• SEP IRAs
• SIMPLE IRAs
• 401(k), 403(b), and 457 retirement plans
RMDs do NOT apply to —
• Roth IRAs (while you’re alive)
• Regular brokerage or investment accounts
When Do You Start Taking RMDs?
Under the 2023 SECURE 2.0 Act, the age at which RMDs begin de-pends on your birth year:
• Born 1951–1959 – Start at age 73
• Born 1960 or later – Start at age 75
First RMD deadline: April 1 of the year after you reach RMD age. All future RMDs: December 31 each year.
Tip: Many retirees take their first RMD in the same year they reach RMD age to avoid having two withdrawals in one year, which could raise their taxes.
How Are RMDs Calculated? Your RMD is based on:
• Your account balance as of December 31 of the previous year
• Your life expectancy, using IRS tables
• Most financial institutions will calculate your RMD for you, but it’s your responsibility to withdraw it on time.
What Happens If You Don’t Take Your RMD?
If you miss your RMD:
• The IRS may charge a 25%penalty on the amount not withdrawn
• If corrected quickly, the pen-alty may be reduced to 10%
What Is a QCD?
A Qualified Charitable Distribution (QCD) is a direct donation from your IRA to a charity. It’s available if you are age 70½ or older.
A QCD Helps You:
Satisfy your annual RMD requirement (if you are 73 or older)
• Avoid paying income tax on the donated amount
• Lower your taxable income (which may reduce Medicare premiums & taxes)
• Support causes you care about — like Senior News & the Medical Equipment Bank
Example
Your RMD for the year = $5,000 If you withdraw it normally, you pay income tax. If you give it as a QCD, it goes directly to the char-ity tax-free. You meet your IRS requirement, save on taxes, and help seniors in your community. If you don’t need the funds, con-sider making a QCD gift. Both the Medical Equipment Bank and Senior News are programs un-der the Thurston-Mason Council on Aging, a 501(c)(3) nonprofit organization, Tax ID: 91-0821977. If you’d like to support these chari-ties, you can mail your Qualified Charitable Distribution (QCD) — as a tax-free gift to:
P.O. Box 7624 Olympia, WA 98507
Make checks payable to:
Senior News or Medical Equipment Bank
For questions, call Nora Hanson, Treasurer and VP, (360) 701-7502, or email: treasurermeb@gmail.com
Questions? Need Help?
Call your financial advisor or retirement plan provider. This is a smart, impactful way to give — and it keeps your dollars working right here at home, help-ing real people in real need.