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Required minimum distributions are a must at 70½

After you turn 70½, you must take yearly

After you turn 70½, you must take yearly taxable distributions from your tax-deferred retirement accounts. Credit: iStock

I'll be 70½ in February. Must I take two required minimum distributions from my IRAs this year? Please explain how this whole process works. What are the rules?


The true deadline for your first annual required minimum distribution, known widely as RMD, is April 1 of the year after you turn 70½ — in your case, April 1, 2016. But you must take your second RMD by Dec. 31, 2016. To avoid taking two RMDs in 2016 — which might boost your income enough to make some (or more) of your 2016 Social Security benefit taxable — it's sensible to take the first RMD before the end of 2015.

To calculate your annual RMD, divide the total balance of all your IRAs on Dec. 31 of the previous year by your life expectancy, which is listed in an actuarial table at the back of IRS Publication 590. At age 70, the table gives you a 27.4 life expectancy factor. If your 2014 year-end IRA balance was $500,000, your first RMD is $500,000 divided by 27.4, or $18,248.

You can withdraw your entire RMD from a single IRA if you wish.

Every year, you must recalculate your RMD based on the previous year's IRA balances and your current life expectancy factor. You can always withdraw more, of course. But additional withdrawals don't count toward next year's RMD.

If you receive payments from an immediate annuity that's held inside an IRA, those payments automatically qualify as RMDs — but only for that annuity. You must do a separate calculation for the rest of your IRAs. You also must do separate RMD calculations for your 403(b), 401(k) and 457 accounts. You can't combine their balances with your IRA balances.

THE BOTTOM LINE After you turn 70½, you must take yearly taxable distributions from your tax-deferred retirement accounts.


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