Tax Tip #227

If you’re subject to required minimum distributions (RMDs), you must take your 2024 RMD by December 31 to avoid penalties. RMDs are mandatory withdrawals from retirement plans such as 401(k)s, IRAs, SIMPLE IRAs and SEPs. Roth accounts aren’t subject to RMDs during the owners’ lifetimes. RMDs are taxable income subject to ordinary-income tax (not long-term capital gains) rates.

RMDs begin at age 73 and imposed a penalty of either 25 or 10 percent.