00:00 Speaker A

As you invest over the course of your career, you will hopefully build enough wealth to support yourself in retirement. That is the goal. But as you get older, you will eventually get to the point where you need to take requirement and required minimum distributions. That means you must withdraw a certain amount from your retirement plans with tax deferred contributions. That includes your IRA, your 401K and 403B. You must take your first RMD by April 1st the year after you turn 73. You will then be required to take another RMD by December 31st, that same year. And then you will be required to take additional RMDs every year. If you don't, you may have to pay a 25% tax on the amount not distributed as required. But that's just for the current batch of retirees. For those who are born after 1960s, well, yeah, after 1960, for those birth dates, you won't be required to take your first RMD until you turn 75. In order to calculate the required minimum distribution for a single IRA holder, you take the total balance by the end of the previous tax year and divide it by the IRS's life expectancy for your age. For example, if you turn 73 in 2025, the IRS thinks you will live an additional 26 and a half years, making the required minimum distribution on savings of $200,000 just over $7,500. The calculation can vary depending on what type of accounts that you have or the age of your spouse. So, make sure to check with your financial advisor. You can also scan the QR code below to find out more about RMDs.