IRS Issues December 31 Deadline – Some Must Withdraw Funds Now or Will Be ‘Subject to Penalties’

IRS Issues December 31 Deadline – Some Must Withdraw Funds Now or Will Be ‘Subject to Penalties’

Someone had better check the thermometer in Hell, because I have feeling it’s been dropping precipitously.

I mean, on Wednesday the Internal Revenue Service actually did something that some people would find useful — helpful for some, even — so I’ve got to believe Adolf Hitler and Idi Amin are sharpening each other’s ice skates.

The IRS on Wednesday issued a statement reminding American taxpayers of an important deadline and about changes to 2023 tax law that could affect them.

The deadline, perhaps unsurprisingly, is Dec. 31, the last day of the year, by which time anyone born prior to 1951 must required minimum distributions, often referred to as RMDs, from certain retirement plans or risk facing financial penalties.

Any born prior to 1950, of course, has probably already set up RMDs for their accounts, but the IRS wanted to remind those whose age requires them to start this year that they didn’t have much time left in the year to make that happen.

The age at which Americans must start taking such distributions did go up by one year in 2023, however, so there could be some confusion about who exactly is required to do what with their retirement savings.

“The Secure 2.0 Act raised the age that account owners must begin taking RMDs. For 2023, the age at which account owners must start taking required minimum distributions goes up from age 72 to age 73,” the agency wrote on its website, “so individuals born in 1951 must receive their first required minimum distribution by April 1, 2025.”

The IRS noted a number of different retirement instruments that were covered by the rule, including SIMPLE IRAs, SEP IRAs, profit-sharing plans, 401(k) and 403(b) plans, and some others.

Roth IRAs are subject to the same rules, but if the account holder passed during the year, his or her beneficiaries probably are.

And some Roth IRAs that are held within under plans can be subject to the RMD rules — but won’t be next year, apparently.

Clear as mud? Great.

There are, of course, lots of rules around required distributions and other end-of-year tax requirements, and if you’re in any doubt about any of them, you should seek professional advice.

In other words, I wouldn’t simply accept the IRS’s statement on what is required and what isn’t without making sure that I know not only the rules, but also how they apply to me and my specific financial situation. But the IRS website’s not a bad place to start.

I’d go into the rules further for you, but in the first place, I’m not a tax professional.

And in the second place, something just flew by my window, and I want to go check to see if it was a pig.

This article appeared originally on The Western Journal.

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