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401(k) Required Minimum Distributions (RMDs) refer to the mandatory withdrawals that individuals must take from their 401(k) retirement accounts once they reach a certain age. Here’s what you need to know about 401(k) RMDs:

1. Age Requirement: RMDs generally begin at age 72 for individuals born on or after July 1, 1949. However, if you turned 70½ before January 1, 2020, the previous RMD age requirement of 70½ still applies to you.

2. Distribution Deadline: The deadline for taking the first RMD is April 1 of the year following the year in which you reach the applicable RMD age. Subsequent RMDs must be taken by December 31 each year.

3. Calculation Method: The amount of the RMD is calculated based on your 401(k) account balance as of December 31 of the previous year and a life expectancy factor. The IRS provides Uniform Lifetime Tables and the Joint Life and Last Survivor Expectancy Table to determine the appropriate factor.

4. Taxation: RMDs are generally treated as ordinary income for tax purposes and are subject to regular income tax. However, if you have made after-tax contributions to your 401(k) account (e.g., Roth 401(k) contributions), those portions are typically not subject to income tax.

5. Penalties for Noncompliance: Failing to take the full RMD or missing the deadline can result in a 50% excise tax on the amount that should have been withdrawn but was not. It’s essential to calculate and fulfill your RMD obligations correctly.

6. Exceptions for Continuing Employment: If you are still employed and participating in a 401(k) plan at age 72 (or the required beginning date), RMDs from that specific plan may be delayed until you retire, as long as certain conditions are met. This exception applies only to the current employer’s plan and not to other retirement accounts.

It’s important to note that RMD rules can be complex, and it’s advisable to consult with a qualified tax professional or financial advisor to ensure you comply with the specific requirements and understand the impact of RMDs on your overall retirement planning and tax situation.