What is a Required Minimum Distribution (RMD)?
Annual minimum distributions from traditional IRAs, SIMPLE IRAs and SEPs must begin by the year the taxpayer reached age 70 ½ . Taxpayers can choose to delay receipt of the FIRST distribution until April 1 of the year following the year they turn 70 ½. Thereafter, the RMD for each year must be made by December 31. If the first distribution is delayed until April 1 of the following year, the second distribution must be made by December 31 of that year. Two RMD payment will need to be reported during that year.
How much is my RMD?
The RMD is the account balance on December 31 of the preceding year divided by the applicable distribution period. Generally in the year your turn 70 ½ this division is 27.4. If your IRA account balance as of 12/31 or the previous year was $100,000, your 1st RMD would be $3,649.64 ($100,000 / 27.4) Your IRA custodian can provide you with a chart showing how the divisor decreases as you get older.
What if I have more than one IRA?
The RMD must be calculated on each traditional IRA, but the amounts can be added together and a distribution can be taken from any or all of your IRA accounts.
Can I take MORE than my RMD?
Absolutely, just remember that ALL distributions from your IRA?s will be taxable in the year you receive them.
Do I have to take my RMD in a lump sum payment?
No, you can have multiple distributions throughout the year. You just need to make sure the total of the distributions equals or exceeds your RMD.
