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Haverhill Bank’s Temple Pruyn Offers A Word About Retirement Accounts Before Tax Day
Manage episode 433800960 series 3592634
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Federal and state tax returns are due in a little more than a month, and for people with retirement accounts, such as a traditional IRA or a Roth IRA, it also means a deadline is approaching for making contributions that count for the 2023 tax year.
It also means, for some, a deadline to start taking money out. The heads up comes from Haverhill Bank Assistant Vice President and Mortgage Officer and Originator Sherry L. Temple Pruyn, who stopped by WHAV’s “Win for Breakfast” program. She spoke about people with a traditional Individual Retirement Account. The traditional IRA is funded with pre-tax money, unlike the Roth IRA which is funded with money already taxed, and the federal government requires taking distributions by a certain age.
“Essentially the deadline to take your first required minimum distribution, which is often known as an RMD, is usually April 1 of the year after you turn 73, and then Dec. 31 each year after that, your RMD for the account balance as of the end of that prior calendar year. It is a big deal because if you don’t do this the IRS does penalize you, and the penalty is steep, it’s 25% of your balance,” she explains.
Individuals have until the tax deadline to make contributions to their IRA. For people under the age of 50, they can contribute up to $6,500 and for people 50 years of age and older, the amount is $7,500.
“I always advise people to either go to the IRS website, IRS.gov, take a look at the calculator to see how much they need to take for their minimum distribution. Reach out to a financial advisor because these are personal decisions based on your own balances in your 401Ks. You can’t just do carte blanche, okay I’m only going to do ‘X.’ You really do have to take in consideration the calculator based on how much money you do have,” Pruyn says.
This year, the deadline for filing 2023 taxes in Massachusetts is Wednesday, April 17 because April 15 is observed as Patriots Day in Massachusetts and April 16 is observed as Emancipation Day in Washington, D.C.
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