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Home » All About RMDs Or MRDs – Goldstone Financial Group

All About RMDs Or MRDs – Goldstone Financial Group

All About RMDs Or MRDs - Goldstone Financial Group

Retirement planning can be a significant decision for those who are nearing their golden years. There are many options available, from traditional IRAs to employer-based savings plans like 401(k)s and 403(b)s. One lesser-known option is the Required Minimum Distribution or MRD. According to Goldstone Financial Group, with an understanding of how RMDs work, you have another tool in your retirement savings arsenal that may help you ensure financial stability during your retirement years. Keep reading to learn more about RMDs – what they are, when they apply, and how they could affect you as part of your retirement planning strategy!

Goldstone Financial Group On RMDs Or MRDs

RMDs, or Required Minimum Distributions, are special rules set by the IRS that require you to withdraw a certain amount from your retirement accounts each year once you reach age 70 ½. These distributions, as per Goldstone Financial Group, are calculated based on your life expectancy and the total account balance in all of your retirement accounts. It’s important to be aware of these rules and make sure you meet the requirements, as failure to do so results in hefty tax penalties.

The calculation for RMDs can vary depending on which type of retirement account you have. Generally, if you own an IRA (Individual Retirement Account), then you will use a formula created by the IRS to calculate the required minimum distribution. This calculation includes factors such as your life expectancy, account balance, and any spouse beneficiaries. For example, if you are 75 years old and the total account balance of your IRA is $200,000, then the calculation for your RMD would be .0027 x $200,000 = $540.

If you own an employer-sponsored plan (such as a 401(k) or 403(b) then the calculation formula is slightly different. This time it takes into account factors such as income tax rates in addition to life expectancy and account balances. The exact calculation depends on your age and situation, but the outcome should always stay the same: you must withdraw a certain minimum amount each year once you reach 70 ½.

It’s important, as per Goldstone Financial Group, to keep track of your RMDs, as failure to meet the requirements can result in hefty tax penalties. The IRS requires you to withdraw your minimum amount by December 31st each year and then pay taxes on that amount. If you fail to do so, not only will you be subject to a 50% penalty (plus interest) on the amount that should’ve been withdrawn, but also an additional 10% penalty for missing the deadline.

Goldstone Financial Group’s Concluding Thoughts

According to statistics, over 70% of people aged 70 ½ don’t take their RMDs at all, or they are taken late due to a lack of knowledge about these rules. Moreover, around 20% of people who have reached this age bracket, as per Goldstone Financial Group, tend to overestimate how much money they must remove from their retirement accounts which consequently leads to them paying more taxes than necessary.