Retirement 2023: Retirees need to withdraw first payment from retirement plans in 10 days

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Retirement 2023: Retirees need to withdraw first payment from retirement plans in 10 days

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Retirees who have yet to make their first mandatory retirement plan withdrawal have less than two weeks to do so if they wish to avoid getting penalized.

While payments from retirement plans are usually made by the end of the year, retirees who turned 72 in 2022 are covered by a rule allowing any of them involved in workplace retirement plans to wait until as late as April 1 to take their first required minimum distribution payment, or RMD. This deadline only applies to retirees receiving their first RMD, after which future RMD payments must be made by Dec. 31, according to the IRS.

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The retirement plans that this deadline applies for include traditional, SEP, and SIMPLE IRAs while the original owner is alive, as well as those who own 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 in 2022.

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.

In some cases, the deadline to receive one’s first RMD does not apply to April 1, such as for those who are still working for their employers. In these cases, most of these people can wait to receive their RMD payments if their workplace plan allows it.

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Recipients who are receiving this RMD by April 1 should also know that it is taxable for the 2022 tax year and needs to be reported on one’s 2023 tax return.

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

© 2023 Washington Examiner

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