Required Minimum Distributions (RMD)

Understanding more about your Required Minimum Distributions

The IRS rules state that as of age 70½ you must begin taking a Required Minimum Distribution (RMD) from your retirement plan or possibly incur severe penalties on the amount you should have withdrawn.

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Frequently Asked Questions


What is a Required Minimum Distribution?


A Required Minimum Distribution (RMD) is a distribution made from an IRA or employer-sponsored retirement plan in order to satisfy IRS regulations. The objective of RMDs is to begin to pay income tax on the money that has accumulated tax-deferred in your IRA or employer's retirement plan.


When do I have to take my RMD?


Generally, RMDs have to be taken on or before December 31 of each year beginning with the year you attain age 70½.


The IRS does provide a grace period for the first year of your RMD, therefore distributions can be taken as late as April 1 of the year following the year you reach 70½. For example, if you attain age 70½ in 2011, you have until April 1, the following year to take your RMD for the year 2012. However, your RMD for that present year must be taken before December 31, 2012. So, if you opted to do this, you would actually have taken 2 RMDs within 1 calendar year. All subsequent distributions must be taken before December 31 of that year.


What happens if I don't take my RMD by the deadline?


Missing the RMD deadline, or withdrawing an insufficient amount, will cause you to incur an IRS penalty. The penalty is 50% of the amount that should have been withdrawn.

I am 70½ years old, but still working and participating in my employer's qualified retirement plan. Do I need to take required minimum distributions from this plan?

You are not required to take an RMD from this plan until you retire. However, if you are a participant in the SEP IRA or SIMPLE IRA, you must begin RMDs at age 70½, regardless of your employment status.


I am 73 years old, still working but moving to a part-time position. Do I have to take an RMD?


No, the number of hours worked is not a factor. To show that you are still employed and not retired, you must receive a W-2 showing earned income from the employer sponsoring the plan within the same year that your RMD would be calculated.


What if I have multiple IRAs and 403(b)s?


You must calculate the requirement minimum distribution for each IRA separately. However, you may withdraw the aggregate amount of your RMD from one IRA or one 403(b) account. You would calculate all your IRAs together and all your 403(b)s together. You cannot merge the two types of accounts.


Is there any way to avoid taking an RMD from my IRA?


Yes. You can roll the IRA over to a current employer 401(K) or 403(b) account.