Most of us have retirement accounts that allow us to defer income – and taxes – until retirement.  Many do not know that a certain “minimum” amount (your RMD) must be withdrawn from each tax-deferred account (with some exceptions) beginning at age 70-1/2.

Exactly when to start is confusing to some people.  The rules state that you must take a RMD in the year that you reach the age of 70-1/2.  The IRS does not care what day of that year you take it on.  The IRS doesn’t care if you take it all at once or in regular payments throughout the year.  You can even delay your first RMD one additional year – but beware!  You will then be required to take two year’s worth of RMD’s in one tax year, which may prove a strain on your tax bracket.

If you have multiple accounts, there are some tricks that make this process easier.  You can aggregate (add up) all of your IRA’s (but not other types of retirement accounts), figure out what you need to take out as a whole, and then take the whole RMD from only one account, if you wish.  Your RMD must be calculated and then withdrawn separately from EACH of your non-IRA (403(b), 401(k), etc….) accounts.

How do you calculate the amount to be withdrawn?  Each company will send you a letter after January 1st of the year you turn age 70-1/2 letting you know that a RMD is required along with the amount of the RMD (and usually the paperwork needed to process an RMD withdrawal request).    If you plan to take your first RMD equally over twelve months, you will need to call each company in October or November of the year prior to request the appropriate paperwork.

If you want to aggregate your IRA’s and decide yourself which account to withdraw from, you will need to do your own calculations.  The basic idea is that you will be dividing the aggregate IRA value (as of the most recent December 31st) by a life expectancy factor that you find on an IRS chart.  The charts (called ‘Tables’) can be found in the Appendices near the very end of IRS Publication 590.  The trick is selecting the right Table:

  • Table I is called the Single Life Expectancy Table and it used by BENEFICIARIES of a deceased IRA owner.
  • Table II is called the Joint Life and Last Survivor Expectancy Table and it is used by original IRA owners “whose spouses are more than ten years younger and are the sole beneficiaries of their IRA’s”.
  • Table III is called the Uniform Lifetime Table and should be used by original account owners (not beneficiaries!) who are single OR “who are married and the spouse is not more than ten years younger” OR “who are married and the spouse is not the sole beneficiary”.

If You Are Still Working

You may be able to delay taking RMD’s from your current employer’s plan until you retire.  This will not work if:

  • The plan is some type of IRA (like a Simple IRA); or
  • You own more than 5% of the company


Special Rules for TSA’s (a.k.a. 403(b) Plans)

These accounts have special rules governing amounts accrued in your account prior to 1987.  It may be possible to delay taking RMD’s on these pre-1987 accruals until age 75 or April 1st of the calendar year following your retirement, whichever is later.


Lastly, these are required MINIMUM distributions.  You can take out as much as you like.  Taking out more makes the IRS happy.  You can take money out before age 70-1/2.  Again, happy IRS.  What you do not want to do is SKIP an RMD that actually is REQUIRED.  I have helped a few individuals who said, “Oops, I forgot” – and, generally, the IRS was pretty forgiving  – the first time.  Thereafter, do not be surprised is 50% penalties are applied!  Because of the intricacies involved in this subject, be sure to get the advice of a financial planner or tax advisor for your specific situation.


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