Required Minimum Distributions

Frequently Asked Questions

We will begin reviewing these requirements with you as you approach 70½. Once you have started distributions we will always send a reminder by October of each year if you have not taken your distribtuion yet for that year. 

After age 70½, IRA owners must start taking required minimum distributions (RMDs) from their Traditional IRAs. The two main factors affecting the amount of money that the IRA owner must take each year are:

  • the IRA's prior year-end balance and
  • the life expectancy of the IRA owner and beneficiary.

When IRAs were created, they were intended to encourage tax-deferred savings for retirement. IRA owners, however, cannot use IRAs to permanently shelter assets from income tax. For this reason, the law requires that you begin taking distributions from your IRAs starting the year in which you attain age 70½. If you fail to take your RMD, you will be subject to a 50 percent excess accumulation penalty tax on the amount that should have been distributed, but was not (IRC Sec. 4974).

IRA distributions must begin by an IRA owner's required beginning date (RBD), which is April 1 of the year following the year the IRA owner attains age 70½. For example, Lars Andrews turns 70½ this year. His RBD for his first RMD is April 1 of next year. The first distribution year (the age 70½ year) is the only year an IRA owner can wait until April 1 of the following year to take an RMD. After the first distribution, IRA owners must take subsequent distributions by December 31 of each year.

EXAMPLE 1

IRA Owner: John B. Goode 

Birthdate: April 24, 1949 
On April 24, 2019, Mr. Goode turns 70. (2019 – 1949 = 70) Six months after April 24, 2019, is October 24, 2019. John will be 70½ in 2019. 

Result: Mr. Goode must take his 2019 RMD by April 1, 2020, his RBD. Mr. Goode must take his 2020 RMD by December 31, 2020.

EXAMPLE 2

IRA Owner: Mrs. Betty Crutcher

Birthdate: July 4, 1949 
On July 4, 2019, Mrs. Crutcher turns 70. (2019 – 1949 = 70) Six months after July 4, 2019, is January 4, 2020. Mrs. Crutcher will be 70½ in 2020. 
Result: Mrs. Crutcher is not required to take a 2019 RMD because she didn’t turn 70½ until 2020. She is required to take her 2020 RMD by April 1, 2021, her RBD. Mrs. Crutcher must take her 2021 RMD by December 31, 2021. 

These examples illustrate that anyone attaining age 70 between January 1 and June 30 in a given year will turn 70½ in that same year.

Also note that if an IRA owner does not take the RMD in the year 70½ year, but waits until April 1 of the following year, the IRA owner must take a second distribution by December 31 of that year. 
 

RMDs generally are determined by dividing the prior year-end IRA balance by the life expectancy factor (or distribution period), as defined in IRS tables. The RMD Planner will automatically calculate your life expectancy factor based on the information you provide. 

RMDs during your lifetime are based on a distribution period that can be determined using the Uniform Lifetime Table and your age. The distribution period is not affected by your beneficiary's age unless your sole beneficiary (for the entire year) is your spouse who is more than 10 years younger than you. 

When determining the IRA balance, certain rules must be followed to determine the proper distribution amount. 

STEP 1: Determine the prior year-end IRA balance.
Use the prior-year's December 31 IRA balance to calculate RMDs. 

STEP 2: Add back any outstanding rollovers, transfers, or recharacterized conversions or retirement plan rollovers and, if applicable, subtract the value of any qualifying longevity annuity contracts.
If an IRA owner takes a distribution in the prior year and rolls it back over to an IRA within 60 days, but after January 1 of the year following the distribution year, this is called an "outstanding rollover". The rolled over amount must be added back to the December 31 balance for RMD calculation purposes. For example, Beth has $40,000 in her IRA #1 and on December 30 she distributes the entire amount, leaving a December 31 balance of zero. Beth rolls over the $40,000 to her IRA #2 on January 15 of the following year. To calculate the new year's RMD, Beth takes the prior-year's December 31 balance of IRA #1 (zero) and adds back the $40,000 (outstanding rollover amount) to arrive at a balance of $40,000.

For purposes of calculating RMDs during an IRA owner's lifetime, the beneficiary named does not affect the calculation, unless the primary beneficiary changes to or from a sole spouse beneficiary who is more than 10 years younger than the IRA owner. 

If your sole beneficiary is a spouse who is more than 10 years younger than you, you may use your age and your spouse’s age to determine your joint life expectancy using the Joint Life Expectancy Table. If you change your beneficiary designation so that your spouse is no longer the sole beneficiary, you must switch to the IRS’ Uniform Lifetime Table to find the applicable distribution period for calculating your RMDs.

A beneficiary's death generally only affects RMDs when the beneficiary is a spouse and the spouse is more than 10 years younger than the IRA owner. In this instance, the IRA owner would switch from the Joint Life Expectancy Table to the Uniform Lifetime Table in the year following the beneficiary's death.

If your beneficiary is not your spouse, beneficiary distributions for years after your year of death are based on either your single life expectancy, starting with your age in the year of death, or your beneficiary's single life expectancy, starting with her age in the year after the year of your death, whichever is longer. If your beneficiary is not a person (e.g., a charity), beneficiary distributions for years after your year of death are based on your single life expectancy, starting with your age in the year of death. The life expectancy factor for these calculations is reduced by one each subsequent year to calculate each subsequent year's distribution.