Louis Barajas explains required minimum distributions for IRA holders 73 and older. Miss a withdrawal and you face a 25% penalty, though it drops to 10% if you correct it within two years. Use your custodian's calculator or an advisor to figure out what you owe for 2023.
73 years of age or older.
Roth IRA.
50% penalty.
25% penalty.
10% penalty.
Foreign.
So we're nearing the year end. And so what some people don't realize is that after 73 years of age or older, and they have IRAs, beneficiary IRAs, rollover IRAs, traditional IRAs, they must, or you must take out what's called a required minimum distribution every single year. It's based on IRS rules where they take a look at the amount that you have on the 1231 of the prior year based on your life expectancy as your current age. And so there's a calculation where you have to pull out a certain amount every single year, otherwise you have a pretty hefty penalty. Now the penalty has been reduced, but prior to The Secure Act 2.0, it used to be a 50% penalty if you didn't pull the money out. So the new law says that the penalty is 25% if you don't pull out the required minimum distribution. But if we do rectify the problem within a two year period, I think the penalty now is only 10%. But it's still pretty hefty enough. Okay, so how do you figure this number out? Very simple. There are, if you go online and just look for a required minimum distribution calculator, or you contact your custodian like Fidelity or Schwab or Persian, or contact your investment advisor, they should be able to give you the number. They should be able to take a look at whether you actually have pulled out enough money.
For 2023. Okay? So don't forget your required minimum distributions. I hadn't seen that problem in a while, but we have new clients this year that the prior investment advisors have not taken the money out or not withdraw the money for the client. And they got letters from the irs. So we're trying to rectify that right now. So just, just again, this is a reminder. If you're over 73 years of age and you have money in an IRA except for a Roth IRA, okay, please take a look at your required minimum distributions.
