This Wednesday, the Internal Revenue Service (IRS) issued an official reminder that retirees turning 73 in 2024 must begin required minimum distributions (RMDs) from their traditional IRAs, 401(k), and similar plans by April 1, 2025. The rule, which is detailed in the IR-2025-33 release, aims to prevent penalties for failure to comply with statutory distributions.
Although RMDs are typically taken annually before December 31, the IRS allows you to delay the first withdrawal until April 1 of the following year after reaching age 73. This deferral only applies to people born after December 31, 1950. However, those who use this extension must make two distributions in 2025, one for 2024 and another for 2025.
Affected plans and notable exclusions, as explained by the IRS
Both withdrawals will be reported on the 2025 income tax. “Failure to comply could generate fines of up to 25% of the undistributed amount,” states the bureau. Exceptions apply to public employees who had 403(b) plans prior to 1987, as well as certain workplace plan participants who have not yet retired, according to IRS Publication 575.
The RMD rules apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k), 403(b), and 457(b) accounts. Custodians of these accounts must report the minimum amount to be withdrawn annually on Form 5498, Box 12b. Roth IRA funds are exempt from this obligation for the lifetime of the owner.
Active employees in work plans, with the exception of owners of 5% or participants in SEP/SIMPLE IRA plans, could defer RMDs until April 1 following retirement. The IRS recommends using Table III (Uniform Life) in Publication 590-B for calculations. For a beneficiary age 73 in 2024, the divisor is 26.5 on the balance as of December 31, 2023.
Support resources and tools from the IRS
The IRS’s portal now includes an RMD FAQ section, as well as calculators and worksheets from Publication 590-B. These resources aid in determining exact amounts, particularly in exceptional cases, such as younger spouse beneficiaries by more than a decade, for which Table II is applicable.
Officials from educational institutions and nonprofit organizations who made contributions to 403(b) plans prior to 1987 should check with their employers for specific information. The agency reiterates that, while custodians can calculate RMDs, the taxpayer is ultimately responsible. According to recent audit data, common mistakes include missing withdrawals and miscalculating the divisor.
So do not forget that the deadline for IRA and 401(k) withdrawals is April 1. Those who turn 73 in 2024 must begin making required minimum distributions or face penalties. Employees with older 403(b) plans, as well as owners of 5% of companies, are subject to special rules. Consult Publication 575 to avoid errors.
