Tax season is full of deadlines, and now the Internal Revenue Service (IRS) is reminding retired taxpayers of another upcoming one: April 1.
The agency explained that this is the final day for retirees – particularly those who turned 72 during 2022 – to start receiving payments, or required minimum distributions, from their 401(k), Individual Retirement Agreements (IRAs), or other workplace retirement programs.
What are required minimum distributions?
For retirees with certain retirement programs, that money can’t sit in those accounts indefinitely. This is where required minimum distributions (RMDs) come in.
RMDs are withdrawals that retirees must make from their retirement programs on a yearly basis. While retirees are free to take out more than the minimum requirements, these withdrawals must be included in their taxable income when they file taxes for the year.
The exact amount of the RMDs will vary from person to person. However, the IRS has several resources available on their website to help taxpayers determine how much they should be withdrawing each year.
What accounts fall under this rule?
So, which accounts are subject to the RMD rules? Below is the full list:
Roth IRA beneficiaries
Profit sharing plans
Other defined contribution plans
The IRS explained that while these withdrawals typically must happen before the end of the year, for those who turned 72 years old in 2022, the final deadline is April 1, 2023. However, those who take their first withdrawal by April 1 must then make their second withdrawal by December 31, 2023.
These rules are set to change slightly by the end of this year, though. When it comes time to file 2023 taxes, retirees will be able to wait until they turn 73 to start taking out RMDs.
More tax resources for seniors
Throughout tax season, the IRS has shared resources that seniors can utilize as they prepare to file their taxes.
For senior taxpayers who have questions about their retirement plans or pensions, they can reach out to Tax Counseling for the Elderly. This program can help guide taxpayers through the filing process, and clear up any confusion about the filing process.
IRS’ Free File tool is specifically for those who have made under $73,000 in 2022, and it allows taxpayers to file their federal returns – and some state returns – for free.