Well, I have some good news and I have some good news…
The first piece of good news is that people are living longer, and the IRS has realized that. The second bit of good news is that because people are living longer, the IRS has actually decreased the amount of required minimum distribution we must take out each year.
The amount of your RMD each year is calculated by taking the balance of your IRA at the end of the previous year and dividing it by a factor, based upon your age, found in the Updated Uniform Lifetime Table. This table can be found on the IRS website. www.irs.gov
The change is relatively small. In broad terms, you are roughly taking out .25% to .5% less of the balance of your IRA in your RMD than in the past. As an example, if you are 72 and have $100,000 in your IRA, your RMD under the old table would be $3,906.25. Under the new table, it is $3,649.63.
Just another couple of reminders. When the Secure Act passed in 2020, it raised the age when required minimum distributions were to start from 70 ½ to 72. And you don’t want to forget to take your RMD because the penalty for doing so is 50% of the amount you didn’t take.
These are the opinions of Legacy Wealth Management, LLC and not necessarily those of Cambridge, are for informational purposes only, and should not be construed or acted upon as individualized investment advice.
Mike Berry is a Registered Representative offering securities through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Legacy Wealth Management, LLC and Cambridge are not affiliated. Cambridge does not offer tax advice.
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