Required Minimum Distributions
RMD
What exactly is a required minimum distribution?
A required minimum distribution (RMD) is a required amount of money that must be withdrawn from traditional IRAs or employer-sponsored retirement plans every year. You are required to begin taking RMDs at the age of 72.
What accounts do RMD rules apply to?
- Employer-sponsored retirement plans
- Traditional IRAs
- SEP IRAs
- SIMPLE IRAs
- Rollover IRAs
- Most 401(k) and 403(b) plans
How Do I calculate an RMD?
Step 1: Visit the IRS website and navigate to the IRS Publication 590. This has the most up to date RMD tables that are needed to calculate your RMD.
Step 2: Find your current age on the IRS Uniform Lifetime Table and the Life Expectancy Factor that corresponds to your age
Step 3: Take your retirement account balance as of December 31 of the prior year and divide it by your current life expectancy factor.
Step 4: That equates to your RMD for the year.
FAQ
April
Under the 2019 legislation, you should have taken your first RMD by April 1, 2020, if you turned 70 ½ in 2019 . If you turned 70 ½ in 2020 or later, you should take your first RMD by April 1 of the year after you turn 72. All further RMDs must be taken by December 31 of each year
Yes, even if you continue working past age 72,* you will need to take an RMD from your IRA. However, if you’re still working, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account (i.e. a 401(k), 403(b), or small-business account).
* The change in the RMD age requirement from 70½ to 72 only applies to individuals who turn 70½ on or after January 1, 2020.
If you are the original account owner, you do not have to take RMDs from a Roth IRA. However, you will have to follow RMD rules if you have inherited a Roth IRA.
Find out more about RMDs by making a complimentary consulation with one of our financial advisors today!
Schedule a complimentary meeting or phone call below.
Personalized Subscription Form
To learn more about Insight Wealth Strategies
call us at (800) 318-7848, email us at info@insight2wealth.com or Request More Information.
