Required Minimum Distributions

Frequently Asked Questions

We will begin reviewing these requirements with you as you approach age 72. 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. 

1. What are required minimum distributions?

RMDs are minimum amounts that you must withdraw annually from your traditional IRA, 401(k), 403(b) or other retirement savings plan once you've reached the mandatory age for making withdrawals.

The mandatory age at which you must begin taking RMDs from your traditional IRA depends on when you were born. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 raised the age for RMDs from 70 ½ to 72 for individuals who turned 70 ½ after December 31, 2019. As a result:

• If you were born before July 1, 1949, you must begin taking RMDs by April 1 of the year following the year you turn 70 ½. As noted above, the CARES Act suspended RMDs for 2020. RMDs for 2021 must be taken by April 1, 2022.
• If you were born after July 1, 1949, you must begin taking RMDs by April 1 of the year following the year that you turn age 72.

For each subsequent year after you begin taking RMDs, you must withdraw your RMD by December 31. Note that the amounts you withdraw typically count as taxable income unless you already paid taxes on your contributions.

2. How do I calculate the RMD?

The RMD for any given year is the total account balance in your traditional IRA, or IRAs, as of the end of the immediately preceding calendar year divided by a distribution period. You can find the distribution period using the IRS's Joint Life and Last Survivor Expectancy Worksheet if your spouse is the sole beneficiary and is more than 10 years younger than you, or the Uniform Lifetime Worksheet for all other IRA owners.

Note: RMDs are calculated using the life expectancy tables issued by the IRS in Publication 590-B. Updates to the life expectancy tables will go into effect January 1, 2022. Check the IRS website for updates.

3. What if I don't take any distributions, or if the distributions I take do not meet the RMD amount?

You may have to pay a 50 percent excise tax on the amount not distributed.

4. Can I withdraw more than the minimum required amount?

Yes. However, be aware that the amount of your RMD, as well as any amount that exceeds the RMD, will be considered taxable income except for any part that was taxed before or that can be received tax-free (such as qualified distributions from designated Roth accounts).

5. If I take more than the minimum amount, can a distribution in excess of the RMD for one year be applied to the RMD for a future year?

No.

6. Can I just take the RMD from one account instead of separately from each account?

This one's a little tricky. If you are a traditional IRA owner, you must calculate the RMD separately for each traditional IRA that you own, but can withdraw the total amount from one or more of the IRAs. Similarly, a 403(b) contract owner must calculate the RMD separately for each 403(b) contract that he or she owns, but can take the total amount from one or more of the 403(b) contracts. However, RMDs required from other types of retirement plans, such as 401(k) and 457(b) plans, must be taken separately from each of those plan accounts.

7. What happens if a retirement plan account owner or IRA owner dies before RMDs have begun?

It will depend on when you inherited the IRA. Generally, for any individual who inherited an IRA from an owner who passed away by December 31, 2019 or before, the entire amount of the owner's benefit must be distributed to the beneficiary who is an individual either (1) within 5 years of the owner's death, or (2) over the life of the beneficiary starting no later than one year following the owner's death. However, for account owners who pass away after December 31, 2019, the SECURE Act requires the entire balance of the account to be distributed within 10 years. There are exceptions for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the original account owner (such as a friend or sibling). The 10-year distribution rule applies regardless of whether the participant dies before (or after) the required beginning date for RMDs, which is now 72 for those who did not turn 70½ in, or prior to, year-end 2019.

See the IRS Required Minimum Distributions for Beneficiaries chart and IRS Publication 590-B, for complete details on when beneficiaries must start receiving RMDs and use the Single Life Expectancy Table found in the publication to compute amount owed.

8. Do I have to take an RMD if I own an annuity?

The answer depends on the type of annuity you own. If you own a variable annuity, and it is held in an IRA, the answer is yes. This is referred to as a "qualified annuity" by the IRS, meaning that it likely was funded with pre-tax money that requires you to pay taxes on your withdrawals, as well as take RMDs. Non-qualified annuity contracts offer tax-deferred growth of after-tax funds; they are taxed when annuitized, but as a general rule are not subject to RMDs. (For tax treatment of qualifying longevity annuity contracts (QLACs), see the IRS’s Form 1098-Q info page.)

9. What reporting obligations does my brokerage firm have with respect to RMDs?

The IRS requires brokerage firms and other financial institutions that are custodians or trustees of traditional IRAs calculate or offer to calculate the RMD for IRA owners and to report this information to the IRS. Firms that serve as administrators to employer-sponsored retirement plans typically have the same responsibility for plan participant RMDs. But mistakes can be made, and investors should carefully double-check any firm's RMD computation using the IRS's RMD worksheets. Tools such as FINRA's RMD Calculator can also be helpful, as can the assistance of a tax professional.

One thing the IRS makes very clear is that RMD calculations are ultimately the taxpayer's responsibility, so don't rely blindly on calculations by your IRA custodian or retirement plan administrator.

A Word About Roth IRAs

Roth IRAs do not require RMD withdrawals until after the death of the owner. If you have a Roth account in an employer-sponsored plan, the IRS recommends that you contact your plan sponsor or plan administrator regarding RMD information.