Do RMDs Apply to You?

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By Bennett Whitlock, CRPC®
Private Wealth Advisor

If your retirement plan includes tax-advantaged accounts, there is a tax rule you should know about: required minimum distributions, or RMDs. This tax rule can be complicated, but the following commonly asked questions can help you understand how it works and how it may apply to you.

Q: What are RMDs?
A: Required minimum distributions are retirement account withdrawals mandated by the IRS once you reach age 70.5. By requiring you to withdraw a portion of your savings, the IRS is able to tax income that has been allowed to grow tax free.

Q: What types of accounts fall under these tax rules?
A: RMDs generally apply to all tax-deferred retirement accounts, including traditional IRAs, SEP IRAs and SIMPLE IRA plans. An inherited IRA is also subject to these tax rules. Roth IRAs are exempt from this requirement, because they are funded with after-tax dollars.

Q: When do I need to withdraw RMDs?
A: RMDs are an annual obligation once you reach age 70.5. In the year you turn 70.5, your first RMD is due by April 1 of the following year. Thereafter, you must withdraw the required amount by Dec. 31 each year. For exceptions, contact your financial advisor.

Q: How are RMDs calculated?
A: Your life expectancy is a factor in your RMD calculation. The IRS provides life expectancy charts and worksheets to help you determine how much you need to take from your IRA. The calculation is different if you participate in a Defined Contribution Plan. However, the plan administrator often will calculate your RMD for you.

Q: What if I own multiple accounts?
A: Once you turn 70.5, each eligible account you own will have an RMD requirement. If you own multiple IRAs, you can choose to add up the RMD amount for each account and withdraw the total from one eligible account to satisfy the requirement for all your accounts.

Q: Can I withdraw the same amount every year?
A: RMDs are not something you can set and forget. Theamount you are required to withdraw can change each year, so it’s important to stay current on the rules. A financial advisor and tax advisor can help you calculate and request your distribution.

Q: What happens if I don’t take the distribution?
A: Ignoring the RMD rule can trigger costly financial penalties. A skipped withdrawal may be taxed at 50%. If you miss a deadline, consult your tax preparer.

Q: Do I need to spend my RMD?
A: No. If you don’t need the cash infusion, consider reinvesting withdrawn funds in a non-retirement investment account. Set aside whatever you may need to take care of tax withholding, if applicable.

Q: May I donate my RMD to charity?
A: Yes, you can, if the contribution is paid out directly from your IRA (by the trustee) to an eligible charity. This is called a qualified charitable distribution, or QCD. A QCD is generally tax deductible, up to certain limits. Be sure to obtain documentation from the charity and provide it to your tax preparer to preserve your tax advantage.

Bennett C. Whitlock III, CRPC®, is a Private Wealth Advisor and Managing Director with Whitlock Wealth
Management, a private wealth advisory practice of Ameriprise Financial Services, Inc. Contact him at 703.492.7732 or visit


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