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What Year Should I take my IRA RMD?

What year should you take your first IRA Required Minimum Distribution (“RMD”)? Is the answer always the year you turn 70 ½? It may not be so simple.  Generally, for IRAs, the beginning date of your first RMD is April 1 of the year following the calendar year in which you reach age 70 ½.

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 IRS Examples:

1)      If your birthday is between January 1, 2014 and June 30, 2014 your reach 70 ½ in 2014 and therefore the first RMD must be taken for 2013 by April 1, 2014.

2)      If your birthday is between July 1, 2014 and December 31, 2014, your reach 70 ½ in 2015 and therefore you do not have an RMD for 2014, you must take your first RMD for 2015 by April 1, 2016.

These examples determine your required beginning date.  For each year after your required beginning date, you must withdraw your RMD by December 31.

Why is this important?

Depending on your beginning date, the first year following the year you reach age 70 ½ you may have two required distributions from your IRA.  The first withdrawal on April 1 (as discussed above).  The second withdrawal on December 31.

 The Answer:

For income tax consequences, one may wish to avoid having both of these amounts included in your income for the same year.  To avoid this you can make your first withdrawal by December 31 of the year you turn 70 ½ instead of awaiting the April 1 of the following year.  For many individuals, this can make a big difference.

Want to learn more about IRA RMD’s or how to properly plan for retirement? Contact us today!

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