Owning an IRA or 401k has never been more important than when you or a loved one are about reach what is known to the Internal Revenue Service as the RMD threshold. In previous years, the age at which the required minimum distribution had to be taken was 70.5, however, that was briefly suspended during the onset of the pandemic. Currently, with the new tax season almost in full swing, there are some changes that abound when it comes to withdrawing and calculating your retirement goals.
As the age of life expectancy has risen over the past few years, the IRS has created new tax tables to account for the distribution amounts for the current year. Account-holders can simply divide their Individual Retirement Account balance at the end of the fourth quarter of 2021 by their age. However, when it comes to beneficiaries. The new method will require basing the distribution on the age of the initial withdrawal after the inheritance took place. As for beneficiaries, who may be younger than retirement age, the IRS will provide additional guidance as it becomes drafted. All in all, this means withdrawing your retirement funds at a slower pace, while keeping more in your accounts and a longer time frame to earn interest on your money.
