Retirement 2023: Retirees need to withdraw first payment from plans in two days

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There are only two days left for retirees to make their first mandatory retirement plan withdrawal to avoid being penalized.

Payments from retirement plans are usually made by the end of the year, but retirees who turned 72 in 2022 are covered by a rule allowing any involved in workplace retirement plans to wait until as late as Saturday to take their first required minimum distribution payment, also known as an RMD. Once this first payment is taken, future RMD payments must be made by Dec. 31 in every following year, according to the IRS.

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The retirement plans that this deadline applies to include traditional, SEP, and SIMPLE individual retirement accounts while the original owner is alive. It also applies to those who have 401(k), 403(b), and 457(b) plans. For the 2022 RMD, the amount can be found on the 2021 Form 5498, which was issued to owners of retirement plans last year.

Any retirees who fail to withdraw their first RMD or do not take out enough money for the payment will receive a 25% penalty based on the amount recipients need to withdraw. The exact amount one should withdraw every year for their RMDs is usually calculated by dividing each retirement account’s prior balance on Dec. 31 by a “distribution period” published every year by the IRS, according to CNBC.

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Recipients who are receiving this RMD by Saturday should also know that it is taxable for the 2023 tax year and needs to be reported on one’s tax return.

More information regarding this deadline can be found on the IRS’s website.

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Tags: Money, Retirement, IRS, Finance, News

Original Author: Asher Notheis

Original Location: Retirement 2023: Retirees need to withdraw first payment from plans in two days

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