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The Government and the U.S. SSA have issued a clear warning | Grok
Economy

Cold Water from the United States Social Security on the IRS: Certain Fine

U.S. Social Security Gets Serious and Warns of the Consequences of Not Fulfilling These Obligations

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by ESTOESATLETI

The United States Social Security, through the Internal Revenue Service (IRS), has issued a stern warning. Retirees and future pensioners must comply with the Required Minimum Distributions (RMD) by December 31, 2025. Failing to do so can result in severe penalties.​Investing.com Español

Important SSA Alert About the IRS: Do This or You'll End Up Being Fined

RMDs are mandatory withdrawals that retirement account holders, such as traditional IRAs and 401(k) plans, must make once they reach a certain age. These distributions ensure that the accumulated funds, which have grown with tax advantages, begin to be taxed as income.​

With the implementation of the SECURE 2.0 Act, the age to start taking RMDs has been raised to 73 years. This means that taxpayers who turned 73 in 2024 had to make their first RMD before April 1 and must make the second one before December 31.​

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If you don't fulfill your duty, you'll get into trouble | PixaBay, Grok, Getty Images Signature, en.estoesatleti.es

Who Does This Rule Affect?

This obligation falls on retirees aged 73 or older or future pensioners who will soon reach that age. It also affects holders of traditional IRA accounts, SEP IRA, SIMPLE IRA, and 401(k) or 403(b) plans and beneficiaries of inherited accounts, under certain conditions.​ It is important to note that Roth IRA accounts do not require RMDs during the account holder's lifetime.​

What Happens If You Don't Comply With the RMD?

Failure to comply with RMDs can result in significant penalties. Starting in 2023, the penalty for not withdrawing the required amount is 25% of the amount not withdrawn. However, if the error is corrected within the following two years, the penalty can be reduced to 10%.

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Pay Attention to the Consequences of Not Completing This Procedure | Dean Drobot, en.estoesatleti.es

The RMD amount is determined based on the account balance as of December 31 of the previous year and the account holder's life expectancy. The IRS provides worksheets and online tools to facilitate this calculation. Although account administrators can help, the final responsibility lies with the taxpayer.​

Important Tips for United States Taxpayers

Don't wait until the last moment to make the RMDs. Consult with professionals; a financial or tax advisor can offer personalized guidance. Use IRS tools, take advantage of the calculators and resources available at the IRS.

Thus, the US Social Security emphasizes the importance of complying with the RMDs by December 31. Retirees and future pensioners must be alert to these obligations to avoid severe penalties and ensure proper financial planning.

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