It’s Tax Season Again!
It seems like every year there are new things to learn about the changes to the tax code, and this year is no different. In fact many changes were made to the way that taxes are paid now, and while we will not cover them all in this article, lets discuss a very important tax stipulation for many Seniors.
Are you over 70? How much do you know about the required minimum distribution?
Because there are severe penalties for non-compliance, we’d like to share the Motley Fool’s Guide to Seniors RMDs.
Deferred retirement saving is one of the best tools at investors’ disposal, but you can’t simply let your money grow forever — at some point, you have to start withdrawing it. This is known as required minimum distributions (RMDs), which is an IRS rule that says you need to start taking distributions from certain retirement accounts beginning at age 70 1/2.
Here’s a guide to what an RMD is, when your RMD deadline is, and how to calculate your 2018 RMD. Be sure that you get this right. The penalty for non-compliance is severe.
What is an RMD?
RMD stands for required minimum distribution, and is an annual minimum amount that must be withdrawn from certain types of retirement accounts after you reach 70 1/2 years of age.
Generally speaking, you have to take each year’s RMD by the end of the calendar year. The only exception is for your first RMD, which must be taken by April 1 following the calendar year during which you turn 70 1/2. For example, if you turn 70 1/2 during 2018, you technically have until April 1, 2019, to take your first RMD. (I say “technically” because there’s a good reason not to wait until the last minute, which we’ll get into later on.) read more here…