Required Minimum Distributions (“RMDs”) are mandatory withdrawals that individuals must take from certain tax-advantaged retirement accounts in the United States once they reach a certain age. These rules are primarily associated with traditional Individual Retirement Accounts (IRAs) and employer-sponsored retirement plans like 401(k)s. RMD rules are in place to ensure that individuals don't indefinitely defer paying taxes on their retirement savings.

Here are some key points about RMDs:

1. Age Requirement: RMDs historically started when you reach age 70.  The 2019 Secure Act changed the age to 72. However, the Secure 2.0 Act changed this a bit and it now begins when you turn 73. In 2033, the RMDs will kick in at age 75.
2. Calculating RMDs: The specific amount you must withdraw as an RMD is calculated based on the account balance at the end of the previous year and a life expectancy factor from IRS tables. The IRS has Uniform Lifetime Tables that most people use for this calculation.
3. Account Types: RMD rules apply to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, and other qualified retirement accounts. Roth IRAs do not require RMDs during the account owner's lifetime. Roth accounts in employer retirement plans will be exempt from the RMD requirements starting in 2024.
4. Deadline: RMDs must be taken annually by December 31st. However, if you're taking your first RMD, you have until April 1st of the year following the year you turn the required age, now 73, to take that first distribution.
5. Penalties: Failing to take an RMD can result in significant penalties. The penalty was recently reduced through Secure 2.0 to 25%, from 50%, of the amount that should have been withdrawn.
6. Taxation: RMDs are generally treated as ordinary income for tax purposes.
7. Beneficiary RMDs: If you inherit a retirement account, RMD rules also apply. The rules vary based on your relationship to the original account owner and the type of account.

Please note that tax laws and rules can change, so it's essential to consult with a qualified financial advisor or tax professional to ensure you're following the most current regulations and taking RMDs correctly based on your specific situation. If you are seeking a retirement advisor with tax expertise, contact Foundation Wealth and Tax Advisors.