Tax Director Ted Ginsburg spoke with Forbes on how Roth IRA owners can avoid hefty penalties by meeting RMD requirements.
By Julie Jason
Until tax year 2023, the penalty (excise tax) for an RMD shortfall was 50% of the amount of an RMD that was not taken by the end of the calendar year in question. For example, a failure to take a $50,000 RMD resulted in a penalty of $25,000 under the old rules. That 50% penalty is now history. SECURE Act 2.0, which was enacted at the end of 2022 as part of the Consolidated Appropriations Act, 2023, reduced the 50% penalty to 25%, and further to 10% in “certain cases.” If you miss an RMD in 2023, this change in the law applies to you (effective beginning in tax years after Dec. 29, 2022).