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Tom Meaglia, ChFC®, AEP®, CLU®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

September/October 2021

RMDs: Know the Rules

RMDs Know the Rules

Whether you’ve already begun taking required minimum distributions (RMDs) from your retirement accounts, or you’re just about to begin, understanding the rules that govern these accounts will help you avoid costly mistakes. Consult your financial and tax professionals before you take a withdrawal.


When:
If you turned age 70 ½ in 2020, or later, you must take your first RMD by April 1 of the year after you turn age 72. After that, RMDs must be taken by December 31 each year — potentially requiring you to take two RMDs in the year you took your first one. Taking two RMDs in one year could put you in a higher tax bracket.


Where:
You must take RMDs from all tax-deferred retirement accounts, including 401(k) and 403(b) accounts, traditional individual retirement accounts (IRAs), SIMPLE IRAs and SEP IRAs. If you have multiple traditional IRAs, you’ll calculate the RMD separately for each account; however, you can take the distribution from one IRA or any combination. With multiple 401(k) accounts, you should calculate the RMD separately for each account and take a distribution from each one.


Taxes and penalties:
Distributions are taxed as ordinary income. If you fail to take your full RMD by the withdrawal deadline, you could face a penalty of 50% of the amount you were required to withdraw but didn’t, plus income taxes.

Exceptions:
You won’t have to take an RMD from your current employer’s plan if you’re still working beyond age 72 and don’t own 5% or more of the company. You will have to take RMDs from a 401(k) with a former employer unless you’re able to roll over the balance(s) to your current plan.


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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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