What is an RMD?
An RMD (required minimum distribution) is an annual distribution you must take from your retirement account(s) when you reach a certain age.
RMDs must be withdrawn from traditional IRAs, SEP IRAs, and SIMPLE IRAs. Roth IRAs are subject to different rules, and no RMDs are required.
Below are important details and deadlines to take into consideration when thinking about RMDs.
What is my RMD age?
Your RMD age is used to determine when you must start taking RMDs. Due to changes in the law, your RMD age is based on the year you were born.
If you were born before July 1, 1949, your RMD age is 70 ½.
If you were born July 1, 1949 - December 31, 1950, your RMD age is 72.
If you were born January 1, 1951 - December 31, 1958, your RMD age is 73.
If you were born after December 31, 1958, your RMD age is 75.
What is a required beginning date (RBD)?
The RBD is the due date for your first RMD. You must take your first RMD no later than April 1 of the year following the year in which you reach RMD age.
Please note that while your first RMD may not be due until April 1 of the following year, if you request a rollover during the year you reach your RMD age, you will have to take your RMD before the rollover can occur.
What is the due date to take RMDs after my first year?
RMDs must be taken annually no later than December 31 for all years after you passed your RBD. This includes the year following the year in which your first RMD is due, regardless of whether you delay taking it until April 1 of the following year.
For example, if you turn 73 in 2023 but delay taking your 2023 RMD until April 1, 2024, you must still take your 2024 RMD no later than December 31, 2024.
How is my RMD amount calculated?
Your RMD amount is calculated by dividing your IRA account balance as of December 31 of the previous year by your life expectancy factor.
Your life expectancy factor is taken from the IRS uniform life expectancy tables. Unless your spouse is (1) your sole beneficiary and (2) they are more than 10 years younger than you, then the factor is taken from the IRS joint life expectancy tables.
Please note that while the RMD is calculated based on the balance in your Guideline IRA, you can withdraw your total RMD amount from any Traditional, SEP, or SIMPLE IRA accounts you have.
Will I owe taxes on my RMDs?
Yes, any amount of your RMD that is pre-tax will be taxable to you as ordinary income and subject to federal and state withholding requirements. Any non-deductible amount that is held in your IRA and included in your RMD will not be included as ordinary income.
Failure to request an RMD may result in a penalty with an excise tax on the difference between the actual amount distributed and the RMD for the relevant tax year.*
How do I request an RMD?
If you are ready to take your RMD for the year, you can do so by using the Transfers feature in your dashboard and selecting the Withdraw Cash option.
Visit the IRS website to learn more about RMDs.
*This information is for general education purposes only and not intended to be tax advice. We encourage you to consult a qualified tax professional before requesting a distribution.