Since RMD was waived in 2020 I forgot all about it in 2021. So did my brokor until late November. Might want to check up on it if you're 70 1/2 or manage accounts for someone who is.
Yep, just checked my acct on-line a couple weeks ago. I think the Government of Confusion upped the age to 72 if my understanding of it is correct. In either case I'm not quite there yet.
Thanks for bringing this up. I am 68 and haven't even thought about this - yet - but spent 30 minutes reading up on it after reading your post. Frankly, there was much I didn't know about this subject so very happy you posted. It appears, I have to take my first a RMD when I hit 72 by April of that year and they have a chart to compute my distribution. Truly annoys me that the government can't ever give us a friggin break, even as we get closer to the finish line. Apparently, they are quite serious making sure you use as much of your savings as possible so they can obtain taxes on it prior to your death because there is a severe penalty... "If you haven’t withdrawn the full RMD amount by the deadline, any money not withdrawn is taxed at 50 percent."
I am a CPA, but I am not yours, so there is no guarantee from me to you as to accuracy, so do with this what you will, and the consequences are only on you. Etc., Etc., Etc. Now, that said: To clarify, the 50% is an excise tax, or for all practical purposes, a PENALTY for not taking the RMD when required. You still get to pay any income tax calculated when you do take the distribution from your retirement account. BUT, there is an "Oopsie, I'm sorry" remedy for this situation that waives the penalty. Part IX of Form 5329 (2020 schedule) doesn't show it on the form, but the instructions tell how to get out of the penalty (or did in 2014, the last time I used this procedure for the third year in a row on the same client - his brokerage account just couldn't/wouldn't get it right).
For those of you who are younger than 72, you need to look at what your RMD (for traditional IRA's or t-IRA's) will do. For some folks, it may affect your tax bracket and Medicare costs. This is especially true if you have invested for dividends and have a pension. I have been trying to take distributions ahead of time (before being forced to do so). However, I got sandbagged in 2021...had taken a distribution then my wife inherited her father's IRA. The SECURE act mandates that non-spousal IRA's have to be disbursed in 10 yrs. My FIL hadn't taken his RMD so we had to take that and it bumped us up a tax bracket and increased Medicare costs. Just something to be aware of.
