Tag Archives: RMD

news update, retirement, RMD

Age increased to 72 for RMD from retirement accounts

For People Who Turn 70 1/2 After December 31, 2019

Included as part of a government spending bill that was signed into law December 20, 2019, The Setting Every Community up for Retirement Enhancement Act of 2019 (the Secure Act) changes the age at which individuals must begin taking the required minimum distributions (RMDs) from retirement accounts. The SECURE Act increases the age at which individuals must begin taking RMDs to 72 from 70 1/2. However, the new law only applies to people who turned 70 1/2 after December 31, 2019. If a person turned 70 1/2 in 2019, or have already been required to take RMDs, the law does not apply.

retirement, tax

Take Required Minimum Distribution by December 31st

Are You 70½ or Older?

Retirement funds cannot be kept in an account indefinitely.  Generally an individual has to start taking withdrawals from an IRA, SIMPLE IRA, SEP IRA, or retirement plan account when he/she reaches age 70½.

Roth IRAs do not require withdrawals until after the death of the owner.

The required minimum distribution is the minimum amount an individual must withdraw from his/her account each year.  The RMD are mandatory, minimum yearly withdrawals that generally must be taken starting in the year the retirement account holder turns 70½.  When an individual turns 70½, they must start taking a required minimum distribution (RMD) or withdrawal from their retirement funds.

Take Distribution by December 31st

Remember to Take RMD (Required Minimum Distribution) by December 31st. An individual generally has until April 1 of the year following the calendar year he/she turns age 70½ to take his/her first MRD.  However, it is recommended that the individual take the first RMD by December 31st of the year that he/she turned 70½, in order to avoid having to take two distributions in the same year.  For each subsequent year after your required beginning date, you must withdraw your RMD by December 31.

Penalty for Not Taking a Scheduled Distribution

Forgetting to take a RMD can result in a significant charge.  If an individual does not take any distributions, or if the distributions are not large enough, he/she may have to pay a 50% excise tax on the amount not distributed as required.

How to Determine Your Distribution Amount

Generally, the amount of the RMD is determined by dividing the adjusted market value of the individual’s account as of December 31 of the prior year by an applicable life expectancy factor. The Uniform Lifetime Table (PDF) can be used to find the individual’s life expectancy factor or the Fidelity Minimum Required Distribution Calculator to help determine what will be required to withdraw.

 

news update, tax

Tax Deadline for 2015 Filing

Tax Deadline Extended This Year

Monday, April 18th, 2016 is the tax deadline for 2015 filings for most people, but it is extended to April 19th for Massachusetts individuals.

Generally, April 15 of each year is the due date for filing your federal individual income tax return if you are a calendar year filer whose tax year ends on December 31.

If you use a fiscal year (which is a year ending on the last day of any month other than December), your return is due on or before the 15th day of the fourth month after the close of your fiscal year.

If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. For example, Friday, April 15, 2016, is Emancipation Day, so tax year 2015 returns are due Monday, April 18, 2016. Taxpayers in Maine and Massachusetts observe Patriots’ Day on Monday, April 18, 2016, so they will have until Tuesday, April 19, 2016 to file.

Your return is considered filed timely if the envelope is properly addressed and postmarked by the due date.

Some Deadline Tips from the IRS website

Monday, April 18, is the tax deadline
File your return and pay taxes by April 18 (19th in MA & ME) to avoid late penalties or interest.

Need more time to file your tax return? Get a 6-month extension of time to file your return (but you still must pay on time).

Here’s what to do if you can’t pay on time
These tips will help if you can’t pay all of your taxes by the due date.

Tax Calendar for 2016

Here’s a handy tax calendar for 2016 supplied by the IRS to help you remember when taxes are due. The General Tax Calendar has important due dates for all businesses and individuals. Anyone who must pay excise taxes may need the Excise Tax Calendar.