As 2024 concludes, it’s crucial to ensure that all eligible plan participants have received their Required Minimum Distributions (RMDs). RMDs are mandatory withdrawals from retirement accounts, such as IRAs and 401(k)s, that participants must begin taking at age 73 (previously age 72 before the SECURE Act 2.0).
Who Needs to Take an RMD?
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Age 73 or Older: Participants who reach age 73 during 2024 must take their first RMD by April 1, 2025.
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Retirement During 2024: Participants who retired in 2024 and reached age 73 must take their first RMD by April 1, 2025, and a second RMD by December 31, 2025.
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More Than 5% Owners: Participants who own more than 5% of the company must begin RMDs upon reaching age 73, regardless of employment status
It’s essential to review your payroll records to identify any participants who separated from service in 2024 and ensure they receive their RMDs by the April 1, 2025 deadline.
By proactively managing RMDs, plan sponsors can help participants avoid penalties and make informed decisions about their retirement distributions.
