The Internal Revenue Service (IRS) is not joking around when it comes to an approaching April 1 deadline.
For retirees who turned 72 in 2022, April 1 will be the last day to begin receiving required minimum distribution (RMD) payments from individual retirement accounts (IRAs), 401(k)s, and other workplace retirement plans, said the IRS in a reminder on Thursday.
While RMDs are generally made by the end of the year, the April 1 deadline only applies to retirees who are receiving their first RMD. “Anyone who reached age 72 during 2022 is covered by a special rule that allows IRA account owners and participants in workplace retirement plans to wait until as late as April 1, 2023, to take their first RMD,” said the IRS.
All future RMD payments must be made by December 31.
According to the IRS, the required distribution rules apply to owners of traditional, SEP and SIMPLE IRAs while the original owner is alive, and various workplace retirement plans, including 401(k), 403(b) and 457(b) plans. RMDs don’t apply to Roth IRAs.
An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2022 RMD, the RMD amount is shown on the 2021 Form 5498, normally issued to the owner during the first part of 2022.
Most participants who are still working for an employer can wait until April 1 of the year after they retire to start receiving these distributions, if their workplace plan allows, the IRS added. This RMD exception does not apply to 5% owners of the business sponsoring the retirement plan or to participants in SEP and SIMPLE IRA plans.
Additionally, employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals, the IRS recommended in its reminder.
For a 2022 RMD (due April 1), the IRS advised taxpayers to use the life expectancy tables in Appendix B of the Publication 590-B.
As shown in Table III, the RMD for a person aged 72 in 2022 will normally be based on a distribution period of 27.4 years. “Divide the Dec. 31, 2021, balance by 27.4 to get the RMD for 2022,” said the IRS.
Starting in 2023, retirees can wait until age 73 to begin receiving RMDs, under new provisions brought on by SECURE 2.0. Under the new legislation, the RMD age will remain at 73 until 2033, when it will then jump to 75. More information can be found on IRS.gov.
SEE ALSO:
- RMD Age Increases to 73 in 2023 Under SECURE 2.0
- A Boon for the 403b: IRS Expands Tax-Favored Approval Process
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
