Required Minimum Distributions (RMD)

Those of you that have IRAs should be aware that you must start taking distributions from those accounts in the year you turn 70 1/2 or pay a substantial penalty. The required minimum distribution (RMD) is figured by starting with your IRA balance as of the end of the year, and dividing each IRA by the factor in IRS Pub. 590 based on your age. You can add the sum of the RMDs and take them from any account if you wish.

The year you hit 70 1/2, you have the option of delaying the payout to April 1st of the following year. This is a one time exception. Which means that if you opt to delay the first payout, then you will have two (2) distributions in that following year, one for the distribution deferred, and one for the required withdrawal for that year. This option could trigger a higher tax bracket as well as Medicare Part B and D premium surcharges in the following year, so it is wise to proceed cautiously.

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