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Deadline to Take Your 2023 RMD is Almost Here Thumbnail

Deadline to Take Your 2023 RMD is Almost Here

It is December. The halls are decked, and Starbucks holiday cups are everywhere. The end of the year is not far away. That means the deadline is near for taking a required minimum distribution (RMD). Here is what you need to know if you have your own IRA or if you are an IRA beneficiary.

The end of the year is not far away. That means the deadline is near for taking a required minimum distribution (RMD). Here is what you need to know if you have your own IRA or if you are an IRA beneficiary.Your IRA

The SECURE Act and SECURE 2.0 have delayed the age for RMDs. In 2023, if you have an IRA (including a SEP or SIMPLE IRA) and you are age 73 or older this year you must take an RMD by December 31. Roth IRA owners catch a break. No RMDs are required during your lifetime if you have a Roth IRA.

Your Inherited IRA

If you have an inherited IRA, you may need to take an RMD by December 31, 2023. While Roth IRA owners do not ever need to take RMDs, Roth IRA beneficiaries do.

After the SECURE Act, many beneficiaries find themselves subject to a 10-year payout. Under IRS proposed regulations, some beneficiaries of traditional IRAs subject to the 10-year rule must also take annual RMDs.

This has caused great confusion and, as a result, the IRS has granted some relief. In 2022, the IRS issued Notice 2022-53, which waived penalties for missed 2021 and 2022 RMDs within the 10-year period. Notice 2023-54 extends the penalty waiver to cover missed 2023 RMDs within the 10–year period. These missed RMDs within the 10-year period will not have to be made up.

Notice 2023-54 does not affect lifetime RMDs, inherited IRAs by eligible designated beneficiaries (EDBs), or RMDs by beneficiaries who inherited before 2020. If you fall into one of these categories as a beneficiary, you must still take your RMD for 2023 by December 31, 2023.

The Clock is Ticking

If you need to take a 2023 RMD from your IRA, the clock is ticking. It is best to get it done sooner rather than later. Many IRA custodians have earlier internal deadlines. There is no reason to wait until the last minute because that is when things can go wrong.

Remember, there is no credit for distributions taken in prior years. Make sure if you are a beneficiary that you take any required 2023 RMD, especially Roth IRA beneficiaries. These RMDs are often missed. Double check your RMD transactions by year end to be sure everything was done correctly.

Every year, people miss RMDs. The result can be a 25% penalty on the amount not taken. Don’t let this happen to you. Now is the time to hustle and take your 2023 RMD, if you haven’t already.

By Sarah Brenner, JD
Director of Retirement Education
Ed Slott and Company, LLC

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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.

Copyright © 2023, Ed Slott and Company, LLC Reprinted from The Slott Report, 12/04/23, with permission. https://www.irahelp.com/slottreport/deadline-take-your-2023-rmd-almost-here, Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article. 
Investment advisory services offered through Mutual Advisors, LLC DBA California Retirement Advisors, a SEC registered investment advisor. Securities offered through Mutual Securities, Inc., member FINRA/SIPC. Mutual Securities, Inc. and Mutual Advisors, LLC are affiliated companies. CA Insurance license #0B09076. This content is developed from sources believed to be providing accurate information and provided by California Retirement Advisors. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. California Retirement Advisors, nor any of its members, are tax accountants or legal attorneys and do not provide tax or legal advice. For tax or legal advice, you should consult your tax or legal professional.