What's the minimum you're required to withdraw on a $1 million retirement account?
Summary
When you turn 73, federal rules require you to withdraw a minimum amount each year from retirement accounts like traditional IRAs and 401(k)s. The required withdrawal increases as you get older, based on your account balance divided by a life expectancy number set by the IRS.Key Facts
- Required Minimum Distributions (RMDs) start at age 73 under current IRS rules.
- The RMD amount is your account balance divided by a life expectancy factor from the IRS Uniform Lifetime Table.
- At age 73, with $1 million saved, the minimum withdrawal is about $37,736.
- At age 75, the minimum withdrawal rises to about $40,650.
- At age 80, the withdrawal increases to about $49,505.
- Required withdrawals are taxed as ordinary income by the IRS.
- Missing an RMD can result in a penalty up to 25% of the missed amount.
- IRA RMDs can be combined and withdrawn from one account, but 401(k) RMDs must be taken from each account separately.
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