Page 20 - Southern Exposure - February '25

Page 20, Southern Exposure

finanCial foCuS ®

What Should You Know About RMDS?

By Sally Sima Stahl, Edward Jones

You may spend many decades contributing to your IRA is 73. And if you were born • How are RMDs taxed? You are typically taxed at your
and 401(k), but eventually you will likely need to take the in 1960 or later, your RMD income tax rate on the amount of the withdrawn RMD.
money out — in fact, you must take the money out or face age is 75. You can postpone You may be able to avoid taxes in a particular year if you
penalties. What should you know about these mandatory accepting your first RMD transfer your RMDs to a qualified charity in what’s known
withdrawals? until April 1 of the year after as a qualified charitable distribution.
Here are some of the basics: you reach your RMD age, but • If I inherit an IRA or 401(k), am I subject to RMDs?
• What are they called? Mandatory withdrawals are this will result in two RMDs Yes. When you take RMDs from an inherited account, you
technically called required minimum distributions, or RMDs. for the year. After you take generally must withdraw all the funds within 10 years, as
• When must I take RMDs? If you were born before your first RMD, you must opposed to over your lifetime, which is the RMD window
1951, you’ve probably already begun taking RMDs. If take subsequent ones by that applies to your own accounts. The rules are somewhat
you were born between 1951 and 1959, your RMD age December 31 of each year. different if you inherit an IRA or 401(k) from your spouse.
• What penalties will be In any case, though, you’ll want to consult with your tax
assessed if I don’t take all my RMDs? For every dollar not advisor about how to take RMDs from an inherited account.
withdrawn, the IRS will charge a 25 percent penalty, but If you’re already subject to RMDs, be sure you’ve taken
this can drop to 10 percent if you subsequently withdraw them before the year ends. And if you haven’t yet started
the correct amount within two years. taking RMDs, learn as much as you can about them —
• Which accounts have RMDs? RMDs apply to traditional because the more you know, the more likely you’ll make
IRAs, as well as other types of IRAs, including SIMPLE the right moves at the right time.
and SEP IRAs. RMDs don’t apply to Roth IRAs. RMDs This article was written by Edward Jones for use by
also apply to traditional 401(k)s, but not Roth 401(k)s. your local Edward Jones Financial Advisor, Edward Jones,
• Can I withdraw more than the RMD for any given year? Member SIPC.
Yes, you are free to take out as much as you want. However, Edward Jones is a licensed insurance producer in
if you take out more than the RMD for one year, you can’t all states and Washington, D.C., through Edward D.
apply the excess to the RMD for the next year. Jones & Co., L.P., and in California, New Mexico and
• How are RMDs calculated? Typically, your RMDs are Massachusetts through Edward Jones Insurance Agency
determined by dividing your account balance from the prior of California, L.L.C.; Edward Jones Insurance Agency of
December 31 by a life expectancy factor published by the New Mexico, L.L.C.; and Edward Jones Insurance Agency
IRS. Your financial professional should be able to perform of Massachusetts, L.L.C.
this calculation for you. Edward Jones, its employees and financial advisors
• If I have multiple accounts, do I have to take an RMD cannot provide tax advice. You should consult your qualified
from each one? If you are taking RMDs from a traditional tax advisor regarding your situation.
IRA, you must calculate each RMD individually, but you Contact us at (561) 748-7600, Sally Sima Stahl, CFP ,
®
can take the total amount from one or more IRAs. If you’re AAMS , 1851 W. Indiantown Road, Ste. 106, Jupiter, FL
™
taking RMDs from a 401(k) or similar plan, you must take 33458.
the RMD from each of your accounts.

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