By Jamie Bosse

Required Minimum Distributions (RMDs) are the amount that the federal government requires you to withdrawal annually from traditional IRAs and employer-sponsored retirement plans after you turn 701/2.  You can always withdrawal more than the minimum from your account in any year, but if you withdrawal less than the required minimum, you will be subject to a penalty.

When must the first RMD be taken?

Your first required distribution is for the year you reach age 701/2.  You can take it during the year that you reach age 701/2 or you can delay it until April 1st of the following year.  Required distributions for subsequent years must be taken no later than December 31st of each calendar year until you pass away or your account balance is zero.  This means that if you opt to delay your first distribution until April 1st of the following year, you will be required to take two distributions in that calendar year.

How are RMDs calculated?

RMDs are calculated by dividing your traditional IRA or retirement plan account balance by a life expectancy factor listed in the IRS tables.  There is one exception to this procedure – the younger spouse rule.  If your sole designated beneficiary is your spouse, and he or she is more than 10 years younger than you, the calculation may be based on the longer joint and survivor life expectancy of you and your spouse.

What happens if I don’t take my RMD?

Remember, you can always withdrawal more than required, but if you fail to take at least the required amount for the year (or you take it too late), you will be subject to the federal penalty.  The penalty is a 50% excise tax on the amount that the RMD exceeds the actual distributions you took during the year.

Tax Considerations

Generally, your RMD is taxable income to you, so it may cause you to be in a higher tax bracket once you come of age.  Your financial planner and accountant will help you stay on top of this important factor in your tax planning!

For specific questions about your retirement, schedule a meeting by clicking below, contact Jamie Bosse –, or call (913) 345-1881.