IRS Publication 590: Individual Retirement Arrangements
Is it individual retirement account or individual retirement arrangement? There is no difference between an individual retirement account (IRA) and an individual retirement arrangement (IRA). They are both types of tax-advantaged accounts that can be used to save for retirement.
The main difference between an IRA and a 401(k) or other employer-sponsored retirement plan is that an IRA is an account that you open and fund yourself, whereas a 401(k) is an account that is sponsored by your employer and funded through payroll deductions.
What are the new RMD rules for 2022? The new RMD rules for 2022 are as follows:
1. The minimum age for taking an RMD will increase from 70½ to 72.
2. The deadline for taking an RMD will be extended from April 1st of the year following the year in which the account owner turns 70½ to April 1st of the year following the year in which the account owner turns 72.
3. The amount of the RMD will be increased from 3.65% to 4.00% of the account balance.
4. The RMD rules will apply to both traditional IRAs and Roth IRAs. Can I take my RMD anytime in the year I turn 72? The answer to this question is yes, you can take your RMD anytime in the year you turn 72. However, if you wait until after December 31 to take your RMD, you will be subject to a 50% penalty on the amount that you should have withdrawn.
How do I calculate my RMD for 2022? The answer to this question depends on a few factors, including the type of IRA you have and the date you turn age 72 (the mandatory distribution age).
For traditional IRAs, you will calculate your RMD for 2022 by taking the balance of your IRA as of December 31, 2021 and dividing it by the distribution period specified in the IRS life expectancy tables.
For Roth IRAs, the answer is a bit different. Roth IRA owners are not required to take RMDs, so there is no need to calculate an RMD for 2022.
However, if you inherited a Roth IRA, you will need to calculate your RMD using the same method as for a traditional IRA.
The IRS has a helpful Publication 590-B that goes into detail on how to calculate your RMD. Do you have to pay taxes on IRA after age 70? You do not have to pay taxes on IRA after age 70.