Required Minimum Distributions

We are bombarded by the media about saving for retirement. 401ks, Simplified Employee Pensions (SEPs), Roth IRAs, Traditional IRAs, Rollover IRAs, you name it. If you’ve had the foresight to save for retirement diligently, congratulations!

As you most likely know, you may not keep savings in retirement plans forever. There comes a time when required minimum distributions (RMDs) must occur.

A required minimum distribution is just that – the amount you must withdraw from your tax advantaged savings plan each year. You may withdraw more than the minimum, but you must withdraw the minimum.

With IRAs (excludes Roth IRAs), you must begin your RMD on April 1st of the year following the calendar year you reach 70 1/2.

With 401ks, profit sharing, 403(b)s, or another defined benefit plan, the rules are the same as IRAs except the first distribution must be taken  by April 1st of the year following the later of the calendar year you reach 70 1/2 or the calendar year you retire. If you own 5% or more of the company sponsoring the plan there is no extension once you reach age 70 1/2.

The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s Uniform Lifetime Table.

Please reach out to us and we can discuss the specifics in detail with you.

* Taxes must be paid upon withdrawal of any deducted contributions plus earnings and on the earnings from your non-deducted contributions. Prior to age 59 1/2, distributions may be taken for certain reasons without incurring a 10% penalty on earnings. None of the information on this page should be considered tax or legal advice.  Please consult your legal or tax advisor for more information concerning your individual situation.