Required Minimum Distribution (RMD) & Additional 401k Contribution at Age 50

Required Minimum Distribution (RMD) & Additional 401k Contribution at Age 50

 Required Minimum Distribution (RMD):

As a professional courtesy, we want to remind our clients over the age of 72 to contact their bank or investment advisor regarding the required minimum distributions that must begin to be taken from an IRA, SEP, 401(k) or any other qualified tax deferred account. The SECURE ACT, Setting Every Community Up for Retirement Enhancement Act of 2019, became law on December 20, 2019, which made major changes to the RMD rules. SECURE ACT 2.0 then raised the age to 73 effective December 29, 2022. If you reached age 72 in 2022, you should have taken you first RMD by April 1, 2023, and your second RMD is due by December 31, 2023. If you reach age 72 in 2023, you must take you first RMD by April 1, 2025. After your initial RMD is taken you must take a yearly RMD by December 31st each year.

We urge you to contact your investment advisor or bank before 12/31/23 if this applies to you, so that you are in full compliance with the tax law. Most advisors, retirement planners and banks automatically handle this, but it is important to be sure you are taking the proper distribution(s).

Additional 401k Contribution at Age 50:

To help older employees save more for retirement in a 401(k) plan, catch-up contributions can be made during the calendar year in which you will turn 50 years old. The catch-up contribution amount for 2023 and 2024 is $7,500 (total contribution limit is $30,000 for 2023 and $30,500 for 2024).

The IRA contribution catch-up amount is $7,500 in 2023 and $8,000 in 2024.

You should contact your plan administrator to make these catch-up contributions.