Required Minimum Distributions (RMDs)
When must I begin taking distributions from a Traditional IRA?
Generally, you must begin taking distributions from a Traditional IRA by April 1 of the year following the year you attain age 70½. This date is often referred to as your “required beginning date,” or RBD.
What does the acronym “RMD” stand for?
RMD stands for “required minimum distribution.” You generally must take an RMD each year from a Traditional IRA once you reach age 70½.
How are RMDs calculated?
Your RMD is calculated by dividing your IRA’s prior-year December 31 fair market value by a divisor taken from the appropriate IRS life expectancy table, which can be found in Publication 590, Individual Retirement Arrangements (IRAs). You generally will obtain the applicable divisor from the Uniform Lifetime Table. If your spouse is your IRA’s only beneficiary and is more than 10 years younger than you, however, you can use the applicable life expectancy factor from the Joint Life Expectancy Table.
Who is responsible for calculating RMDs for Traditional IRAs?
Both you and the financial organization share some responsibility. You generally are responsible for calculating and taking your RMD. But federal regulations require financial organizations to either report the RMD amount to IRA owners (based on certain assumptions), or to calculate the RMD if requested by the IRA owner.
If I have multiple investments within my Traditional IRA, must I calculate a separate RMD for each investment?
No. Your RMD is calculated based on the aggregate balance of all investments held within the same Traditional IRA. If you have more than one Traditional IRA, you must calculate the RMD for each IRA individually.
When do I have to take an RMD from my Traditional IRA?
You must take your first RMD by April 1 of the year following the year you attain age 70½. With the exception of the first RMD year (which is the year you attain age 70½), your RMD must be taken by December 31 each year.
If I do not take my first RMD from my Traditional IRA until April 1 of the year after I attain age 70½, when must I take my second RMD?
Your second RMD must be taken by December 31 of the year following the year you turn age 70½, regardless of when you take your first RMD. In other words, you may end up taking two RMDs in your second RMD year.
If I take more than my RMD from my Traditional IRA, can I use the overage to reduce future RMDs?
No. Amounts taken in excess of your RMD amount may not be applied to reduce future RMD amounts.
Are RMDs from Traditional IRAs generally taxable at the time of distribution?
Yes. RMDs from Traditional IRAs (less any nondeductible assets included in the distribution) generally are subject to federal income taxes, but the 10 percent early distribution penalty tax does not apply. Depending on your circumstances, distributions from a Traditional IRA also may be subject to state and local income taxes as well.
Are RMDs from Traditional IRAs subject to federal income tax withholding?
Yes. RMDs from Traditional IRAs generally are subject to federal income tax withholding unless you elect to waive withholding.
How much federal income tax withholding is applied to an RMD?
As a general rule, financial organizations must withhold 10 percent of your Traditional IRA distribution for federal income tax purposes unless you elect to either waive federal income tax withholding altogether or have more than 10 percent withheld. Depending on your circumstances, your distributions from Traditional IRAs also may be subject to state income tax withholding. Federal withholding for annuitized disbursements from an IR annuity, however, is determined according to the withholding tables used for federal income tax withholding on wages.
If I have more than one Traditional IRA, may I combine the RMDs for my various Traditional IRAs and take the entire required amount from just one of my IRAs?
Yes. IRA owners generally may aggregate their RMD amounts from multiple IRAs and take the entire amount from one or more IRAs even though each IRA’s RMD must be calculated separately. Any distributions you are required to take as a beneficiary after the IRA owner’s death may not be aggregated with RMDs you are required to take from your own Traditional IRAs as an IRA owner.
If I am required to take an RMD from my 401(k) plan account, can I satisfy this RMD by distributing the required amount from my Traditional IRA?
No. RMDs for IRAs may not be aggregated with RMDs from qualified retirement plans (e.g., 401(k) plans), 403(b) plans, or governmental 457(b) plans; the RMDs must be distributed separately from each other.