In IR-2021-245, the IRS reminds retirement plan participants and individual retirement account owners that required minimum distributions (RMDs) must usually be taken by Dec. 31. Generally, account owners must withdraw RMDs annually starting with the year they reach 72 or, if later, the year they retire. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age 72, even if they’re still working. RMD amounts not timely withdrawn from accounts may be subject to penalties.

Individuals who reached 70 and a half in 2019, (70th birthday was June 30, 2019, or earlier) did not have an RMD due for 2020, but will have to take one by Dec. 31, 2021. Individuals who turn age 72 in 2021 (and their 70th birthday was July 1, 2019, or later) have their first RMD due by April 1, 2022.

The required distribution rules apply to:

  • Owners of traditional individual retirement arrangements (IRAs)
  • Owners of traditional simplified employee pension (SEP) IRAs
  • Owners of savings incentive match plans for employees (SIMPLE) IRAs
  • Participants in various workplace retirement plans, including 401(k), Roth 401(k), 403(b) and 457(b) plans

Roth IRAs do not require distributions while the original owner is alive.