A Pakistani money trader shows U.S. 100 dollar notes at a currency exchange office, in Lahore, Pakistan, Thursday, Jan. 28, 2023. Cash-strapped Pakistan’s currency plunged Thursday against the dollar after the government indicated it was ready to comply with tough conditions set by the International Monetary Fund for the next tranche of its bailout package. (AP Photo/K.M. Chaudary) K.M. Chaudary/AP

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

Asher Notheis March 26, 06:00 AMMarch 26, 06:01 AM Video Embed

In a little under one week, retirees who have not made their first mandatory retirement plan withdrawal will be penalized.

Payments from retirement plans are usually made by the end of the year, but 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. After this first payment, future RMD payments must be made by Dec. 31 in every following year, according to the IRS.

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The retirement plans that this deadline applies to include traditional, SEP, and SIMPLE IRAs while the original owner is alive. It also applies to those who have 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.

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Recipients who are receiving this RMD by April 1 should also know that it is taxable for the 2023 tax year and needs to be reported on one’s 2024 tax return.

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

© 2023 Washington Examiner

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