Don't Forget About These 3 Required Minimum Distribution (RMD) Rule Changes From 2024
These small rule changes could have a big impact on your retirement plans in 2025.
One of the biggest advantages of saving in retirement accounts like a 401(k) or IRA is that you can deduct your contribution from your taxes. On top of that, your investments in those accounts grow tax free. The only time you'll owe taxes is when you take money out of your retirement accounts. That can give you a lot more money to invest today, as well as result in a bigger nest egg when it comes time for you to retire.
But eventually the government wants its tax revenue. That's why it imposes required minimum distributions, or RMDs. Once you reach a certain age, you must start making annual withdrawals from most traditional retirement accounts. And you'll have to pay the income taxes on those withdrawals too. RMDs can also apply to inherited IRAs regardless of how old you are.
If you don't know all the RMD rules, you could face a hefty fine from the IRS. The government will take up to a 25% penalty on any amount you fail to withdraw on time. Not to mention that you'll still have to take the distribution and pay the income taxes on it.
