Name: IRS Reminds Many Retirees They Must Withdraw Money from IRAs by Special Deadline or Face Penalties
Uploaded: 2023-03-13T18:30:27.000Z
Description: The Internal Revenue Service (IRS) has issued a reminder to retirees who turned 72 last year that, in most cases, they face a deadline on April 1, 2023, to take their first payment from their workplace retirements plans or face penalties.

NTD Newsroom comprises teams of reporters, editors, and producers assigned to cover breaking news and other stories.


NTD Newsroom

NTD Plus

News

News you can trust from the U.S. and around the world. Critical information and insight. We cover the stories that others don’t. NTD News Today airs Monday–Friday at 11 a.m. ET.

NTD News Today

Pentagon Scraps Deployment of 4,000 Troops to Poland

9/11 Memorial and Museum Adds 7th Moment of Silence

AT&T, T-Mobile, Verizon Launch Joint Venture to Tackle Dead Zones

Stefania Cox is an NTD News anchor and national correspondent based at the network's global headquarters in New York City. Stefania anchors "NTD Newsroom," and co-anchors "NTD News Today" weekdays at 10:00 am ET.

Stefania Cox

Trump Committed to US Defense, Prosperity, Amid China Talks: Expert

Jerome Powell Ends Tenure as Fed Chair

US Government Sues Chick-fil-A Over Religious Rights

California Gubernatorial Candidates Make Closing Pitches to Voters 

House Passes 1st Fiscal Year 2027 Appropriations Bill

Jason Blair is a national correspondent for NTD News based in California. 

Jason Blair

Federal Judge Partly Blocks Texas Immigration Law

Trump Announces National Garden of American Heroes Plans

NTD News Today Full Broadcast (May 15)

Paul Greaney is an NTD news anchor and producer. Since joining the company in 2018, he has anchored the station’s flagship Evening News broadcast, launched the NTD Business show, and produced documentary reports on pointed issues. 

The highlight of Paul’s time in the field was his coverage of the Hong Kong pro-democracy protests in 2019.

Paul Greaney

NTD News Today Full Broadcast (May 14)

Kevin Hogan is an NTD News data reporter and national correspondent based at the network's global headquarters in New York City. Kevin covers breaking news, as well as U.S. and global current events. He conveys the news through data visualizations and investigates pressing issues.

Kevin Hogan

NTD News Today Full Broadcast (May 13)

NTD News Today Full Broadcast (May 12)

NTD News Today Full Broadcast (May 11)

NTD News Today Full Broadcast (May 8)

NTD News Today Full Broadcast (May 7)

NTD News Today Full Broadcast (May 6)

NTD News Today Full Broadcast (May 5)

NTD News Today Full Broadcast (May 4)

Fast, compelling, first-hand news from China. China in Focus airs Monday–Friday at 8 p.m. ET.

China in Focus

China Sends Warships to Pacific Drill as Tensions With Japan Rise

Reuters is a news agency owned by Thomson Reuters. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide writing in 16 languages.

Reuters

We present news that is truthful and based on facts, outside of the political fog. Instead of focusing on the negative things happening around us, our mission is to give our viewers a good morning with empathetic and uplifting stories. Our aim is to provide an antidote to negativity by shining a light on the best side of people. We speak to inspiring people who positively impact communities, pursue topics that represent our common human values, and will never miss an opportunity to bring you heartwarming stories.

NTD Good Morning

2 US Embassy Personnel Assigned to Cartel Case Killed in Car Accident

The Associated Press is an American not-for-profit news agency headquartered in New York City. 

The Associated Press

US News

Gunman Kills 8 Children, Including 7 of His Own, in Louisiana Mass Shooting

Flora Hua is a reporter based at NTD's global headquarters in New York City, where she covers China news, U.S.-China relations, and human rights issues. Flora primarily contributes to NTD's "China in Focus."  

Flora Hua

Trump: Seized Iranian Ship May Have ‘A Gift From China’

Joseph Lord is a congressional reporter for The Epoch Times.


Joseph Lord

Aldgra Fredly is a freelance writer covering U.S. and Asia Pacific news for The Epoch Times.

Aldgra Fredly

Former NYC Mayor Rudy Giuliani Hospitalized in Critical Condition: Spokesman

Wildfires Across Georgia and Florida Have Destroyed Nearly 50 Homes and Are Forcing Evacuations

US Warns of China Hacks via Routers, Smart Devices

Juliet Song is an international correspondent exclusively covering China news for NTD. She primarily contributes to NTD's "China in Focus," covering U.S.-China relations, the Chinese regime's human rights abuses, and domestic unrest inside China.

Juliet Song

2 Americans Among Suspected Communist Rebels Killed in Clashes With Troops, Philippine Officials Say

Ryan Morgan is a reporter for The Epoch Times focusing on military and foreign affairs. He was previously a news writer for NTD. 


Ryan Morgan

Mari Otsu is NTD's White House correspondent based in Washington. 

Mari Otsu

World News

Middle East

Iran

3 US Warships Fend Off Iranian Attacks, Trump Says Ceasefire Still Holds

Health News

3 Dead in Suspected Hantavirus Outbreak on Cruise Ship in Atlantic Ocean: WHO

The Internal Revenue Service (IRS) has issued a reminder to retirees who turned 72 last year that, in most cases, they face a deadline on April 1, 2023, to take their first payment from their workplace retirements plans or face penalties.

Americans can't keep their retirement funds in their accounts indefinitely. When they turn 72, they generally have to start taking withdrawals from their plans, such as from traditional individual retirement accounts (IRAs), 401(k)s, and other workplace retirement plans.

These withdrawals, called required minimum distributions (RMDs), are normally made by the end of the year. But a special rule that applies to people who turned 72 during 2022 lets such individuals wait until April 1, 2023, to take their first required withdrawal.
<h2>Penalties</h2>
The IRS said in its <a href="https://www.irs.gov/newsroom/irs-reminder-to-many-retirees-last-day-to-start-taking-money-out-of-iras-and-401ks-is-april-1">advisory</a> on Mar. 9 that April 1, 2023, is the deadline by which anyone who reached age 72 last year must receive their first payment—and then take a second one by Dec. 31 of this year. Those who fail to meet the deadlines face the prospect of significant tax penalties.

People who don't take any distributions, or if the amounts aren't large enough, may have to pay a 50 percent excise tax on the amount that should have been withdrawn but wasn't.

For example, if the RMD for a retiree is $10,000 for a given year and they fail to withdraw this amount by the deadline, they face a $5,000 penalty.

Fortunately, the penalty may be waived in the owner of the retirement account manages to establish that the shortfall was due to a "reasonable error" and that they're taking "reasonable steps" to address the problem. Instructions to Form 5329 (<a href="https://www.irs.gov/pub/irs-pdf/i5329.pdf">pdf</a>) provide details on how taxpayers can ask the IRS to waive the tax penalty for "reasonable cause."

The April 1st deadline for people who turned 72 last year only applies to the required distribution for the first year. The deadline for taking RMDs for subsequent years falling on Dec. 31 of a given year.

This means that taxpayers who get their first RMD (for 2022) on or before the April 1st deadline must receive their second RMD (for 2023) by Dec. 31, 2023.

For this group of retirees, the first RMD is taxable in 2023 and reported on the 2023 tax return.

The RMD rules apply to people who own traditional, SEP, and SIMPLE IRAs, while the original owner is alive. Roth IRAs don't require withdrawals until after the owner's death.

RMDs also apply to individuals who participate in various workplace retirement plans, including 401(k), 403(b), and 457(b) plans.
<h2>Postponing Some RMD Deadlines Possible</h2>
While the April 1st deadline is mandatory for those in traditional IRAs and workplace retirement plans, there's an exception that lets some people with workplace plans wait longer to get their RMDs.

Specifically, most people with workplace plans who are still working for their employer can wait until April 1 of the year after they retire to start receiving RMDs.

This exception does not apply to participants in SEP and SIMPLE IRA plans, however. It also does not cover the 5 percent contributed by owners of the business sponsoring the retirement plan.

There are also special rules that may apply to employees of public schools and some tax-exempt organizations with 403(b) plan accruals before 1987. Such individuals are advised to check with their plan administrators or employers for how to handle these accruals, the IRS notes.
<h2>Calculating the RMD</h2>
The IRS provides a <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/required-minimum-distribution-worksheets">resource in the form of worksheets</a> that can be used to calculate the required minimum distribution amounts.

There are two RMD worksheets. The first is <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/ira-required-minimum-distribution-worksheet-spouse-10-years-younger">to be used</a> in cases where the person's spouse is the sole beneficiary of their IRA and is more than 10 years younger than the IRA owner. The <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/ira-required-minimum-distribution-worksheet">second worksheet</a> is for everyone else.

There are also <a href="https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary">special rules</a> for people who inherited IRAs or retirement plans from the original owner.

<em>From <a href="https://www.theepochtimes.com/irs-reminds-many-retirees-they-must-withdraw-money-from-iras-by-special-deadline-or-face-penalties_5113587.html">The Epoch Times</a></em>

Videos

04_Top Stories

Latest Clips

retirees

Tom Ozimek is a senior reporter for The Epoch Times. He has a broad background in journalism, deposit insurance, marketing and communications, and adult education.

Tom Ozimek

Daniel Monaghan is a reporter for NTD News covering culture, social issues, and education. He holds a BA in Political Science and Government.

Daniel Monaghan

Latest and breaking news, documentaries, movies, and lifestyle content on NTD+.
 
Empower your knowledge and elevate your spirit with NTD+, your go-to destination for truthful news, insightful documentaries, and captivating lifestyle content that enriches your life.

IRS Reminds Many Retirees They Must Withdraw Money from IRAs by Special Deadline or Face Penalties

NTD News Today Full Broadcast (March 13)

Cubans Struggle to Keep Silky-Haired Lapdogs

Legislators Call for Better Oversight of USDA Spending After 2022 Audit Shows Millions in ‘Questioned Costs’

Ross Muscato covers the U.S. Congress for The Epoch Times.