What Is A RMD?

Congress created IRAs to help promote saving for retirement but it never intended Americans to defer taxes forever. That is why the Tax Code requires that after IRA account owners reach the age of 70½, their Required Beginning Date (RBD) is triggered and they must begin drawing down their accounts and paying income taxes on the distributions. Those withdrawals are called Required Minimum Distributions (RMDs).

Note: Roth IRA owners are not required to take Required Minimum Distributions.

Failure to take RMDs on time after the RBD, can trigger stiff penalties – additional tax penalty of 50% on distributions you were supposed to take but didn’t. Your America’s Tax Solutions^TM retirement distribution specialist will gladly describe for you how the calculation for an RMD is done based on your previous year’s IRA balance and your life expectancy. That life expectancy figure is not predicated on your family tree or a doctor’s physical, but rather, by a Uniform Lifetime Distribution Table.

FACTS ABOUT REQUIRED MINIMUM DISTRIBUTIONS (RMDS)

• Traditional IRA owners: RMDs must begin no later than April 1st of the year after turning age 70½
• Required Beginning Date is the date at which you must begin taking RMDs
• There is a 50% penalty for failing to take RMDs on time
• Roth IRA owners are not subject to RMD rules but beneficiaries of
• Roth IRAs are subject to RMD rules

Your America’s Tax Solutions ^TM retirement distribution specialist will assist you with this calculation, identify your Required Beginning Date, and help ensure that you do not fail to take your scheduled RMDs.