RMD Benefits

If you own or are the beneficiary of an IRA, 401(k) or other retirement plan, make sure you don’t make an RMD (required minimum distribution) error. Failure to take at least the RMD amount each year results in a 50% penalty imposed by the IRS!

• IRA owners: your first RMD must be taken no later than April 1st of the year following the year you turn 701⁄2.

• You reach age 701⁄2 on the date that is 6 calendar months after the date of your 70th birthday.

• After an IRA owner’s very first RMD, all subsequent RMDs must be taken no later than December 31st each year.

• RMDs are generally calculated by dividing the adjusted market value of your IRAs as of December 31st of the preceding year by the distribution period that corresponds with your age in the Uniform Lifetime Table (IRS Publication 590-B).

• You must calculate the RMD amount for each IRA separately. However, if you have more than one IRA (must be the same type), you don’t have to take a separate RMD for each…you can aggregate and withdraw the entire amount from just one IRA of the same type or withdraw a portion from each IRA to satisfy your RMD.

• Failure to take a timely RMD results in a 50% penalty on the undistributed amount. This rule applies to both IRA owners and IRA beneficiaries.

• You can always withdraw more than the minimum distribution amount… just be prepared to pay the taxes.


More Updates


For trusts that inherited an IRA in 2019, an important deadline is approaching. The due date to provide required trust documentation to the IRA custodian to ensure that the longest payout period possible is available for the inherited IRA is October 31, 2020. Generally, only individuals who are named on an IRA beneficiary form can

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The coronavirus-related distribution (CRD) rules for Roth conversions have a gaping hole. An “affected person” (as we have defined in previous blogs), is entitled under the CARES Act to withdraw up to $100,000 from their IRA or workplace retirement plan. A CRD avoids the 10% early distribution penalty for those under 59 1/2, can be

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Rolling Over an RMD

Like most people’s lives, the retirement world is upside down. This is made evident by a single statement: “Required minimum distributions (RMDs) can be rolled over.” Yes, that is the new normal—at least for this year. RMDs are considered the first money out of an IRA and workplace plan. Typically, these dollars are ineligible to

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