Remember when you used to give your age using fractions? “I’m three and three quarters!” you would proudly declare. The time has come again to proclaim your age with a fraction, especially if you’re seventy and a half – this message is for you:
- RMDs must typically be taken by December 31 each year; except for the year in which you turn 70 and a half.
- When you turn 70 and a half, you have until April 1 of the next year.
- The effective deadline for 2014 RMD first-timers is coming up fast. Tuesday, March 31 is the deadline.
To clarify: if you turned 70 and half in 2014, you must take your Required Minimum Distribution (RMD) by March 31st, 2015
If your financial advisor has not contacted you via email or regular mail, we recommend you reach out to him/her to ensure your proper RMD has been calculated.
Did you receive a form 5498? Look at Box 11 to see if an RMD is due.
For more information or for RMD calculators, click here.
- The RMD rules apply to traditional IRAs, most 401(k)s and other qualified retirement plans. The rules don’t apply to Roths.
- RMD amounts are based on an IRS formula driven by the account owner’s life expectancy; the RMD is calculated by dividing the year-end account total by the number of years you’re expected to live.
- If you have multiple accounts, you need to calculate the RMD for each IRA separately. But you can aggregate the amounts owed and make the withdrawals from whatever accounts you like.
- If you have other qualified plans (such as 401(k)s) those must be calculated and paid out separately from those accounts.
- If you have an inherited (or beneficiary) account, that RMD must be satisfied separately, too.
- Although most investors take the smallest RMD possible, there’s no limit on how much you can withdraw without penalty after you reach age 59-1/2.
- RMDs can be taken in a single lump sum, or through a series of timed distributions throughout the year.
Be sure to check out our Social Security and Retirement Planning page on our website for more information on RMDs, Roths and general information on the subject. We are happy to help with any planning or questions you may have.