Author: David Ellison
Required Minimum Distributions (RMD’s), as the name implies, are minimum annual distributions that you are required to take from retirement accounts beginning in the year you turn 70 ½. There is a 50% tax on the RMD’s that you do not take, so it is very important that you understand the requirements and take these distributions.
RMD’s must be calculated and taken from all of your IRA accounts, rollover IRA accounts, 401(k) accounts, beneficial IRA accounts and Roth 401(k) accounts. If you are still working, and less than a 5% owner of the business, the 401(k) at your current employer may be exempt. Please check with your plan sponsor. The only other exceptions are Roth IRAs. Don’t forget any 401(k) accounts left at former employers.
Many brokerage firms or money managers will calculate the RMD’s for you. If not, there are many online tools. Once calculated for all your accounts, the total RMD can be taken from one of your accounts, they do not have to match up account by account as long as the total is correct.
You cannot combine RMD’s with your spouse. Each of you must take your calculated RMD’s from your own accounts.
You still have time to take your 2019 RMD’s, as long as they are distributed by December 31st. If you turned 70 ½ during 2019, you have until April 1st 2020 to take your first distribution.
If you have any questions or would like to discuss this further, please contact us.