Time is running out: Seniors must act now on 2025 RMD deadlines
US citizens and residents aged 73 or older must take their Required Minimum Distributions (RMDs) by the end of this year. This year's RMD calculation involves dividing the account balance as of December 31, 2024, by the distribution period found in the IRS' Uniform Lifetime Table for the individual's age as of December 31, 2025.
Those who turned 73 in 2025 have until April 1, 2026, to take their RMD, but delaying it may result in having to take two RMDs in 2026, which could be disadvantageous if a recession occurs. RMDs are mandatory from traditional IRAs and 401(k)s, but not from Roth accounts. Missing the deadline incurs a 25% penalty on the amount not withdrawn.
Alternatively, a qualified charitable distribution (QCD) of up to $108,000 can be made instead of taking RMD. To qualify, the money must be sent directly from the retirement account to the charity, and the decision should be made within the next couple of weeks to allow time for processing. Taking RMD in November allows time to address potential issues and avoid last-minute rushes during the holiday season.
In summary, US citizens and residents aged 73 or older must take their RMDs by the end of this year or face a 25% penalty. They can choose to take the distribution now or make a qualified charitable distribution instead. Planning ahead and taking action within the next couple of weeks will help avoid any last-minute rushes.
