Calculations
The size of required beginning distributions is governed by tables published by the IRS that are based on estimated life expectancies.
 

  • Uniform Lifetime Table – Used by most taxpayers. It provides a figure representing the anticipated distribution period.
  • Joint Life and Last Survivor Expectancy – If a spouse is the sole beneficiary of an IRA and the spouse is more than 10 years younger than the account holder then this table is used. It reflects the joint life expectancy of the couple.
  • Calculating Required Minimum Distribution – The account balance is divided by the distribution period figure (as obtained from one of the two above tables).
    • Account Balance - As of December 31 of the preceding year.
    • Age – As of the end of the calendar year for which the distribution is being made.
    • For example, the RMD for the year 2013 would be based on the individual's age as of Dec. 31, 2013, and the account balance of Dec. 31, 2012.

RMD = Account balance as of December 31 of preceding year
Distribution period (as determined by relevant table)

The balance for a given year's distribution is the balance as of December 31 of the preceding year, while the age is as of the end of that calendar year. So for the 2006 distribution, the account balance is divided by the distribution period for the taxpayer's age as of Dec. 31, 2006.
 



Beneficiary Considerations or Stretch IRAs

Related Articles
  1. Financial Advisor

    An Overview Of Retirement Plan RMDs

    Make your deadlines for required minimum distributions and save more of your nest egg.
  2. Financial Advisor

    How to Save Clients from RMD Aggregation Mistakes

    Advisors can help clients avoid required minimum distribution mistakes in their retirement plans.
  3. Financial Advisor

    Multiple Accounts? Here's How to Calculate RMDs

    Ever wondered about how to calculate required minimum distributions on multiple accounts? Here's a quick primer.
  4. Retirement

    Don't Wait Too Long to Tap Into Your Retirement

    Are you approaching your 70th birthday? If so, you'll want to tap into your retirement accounts — before the IRS assesses a hefty fee.
  5. Retirement

    6 Important Retirement Plan RMD Rules

    Paying taxes is inevitable - that's why you need to learn about the rules for required minimum distributions.
  6. Retirement

    Everything Retirees Need to Know About IRA RMDs

    When you reach age 70.5, you will need to begin taking RMDs from your tax-deferred accounts.
  7. Retirement

    3 Deadlines For Retirement Plan Beneficiaries

    To take full advantage of new RMD regulations, beneficiaries need to take action before important deadlines.
  8. Financial Advisor

    Tips to Help Your Clients Make the Most of RMDs

    Here are some tips for advising clients faced with taking required minimum distributions.
  9. Retirement

    Should Required Minimum Distributions Be in Cash?

    What is the most tax-efficient way to take required minimum distributions from your retirement plan? Several financial advisors weigh in.
Frequently Asked Questions
  1. What are the Differences Among a Real Estate Agent, a broker and a Realtor?

    Learn how agents, realtors, and brokers are often considered the same, but in reality, these real estate positions have different ...
  2. What is the difference between amortization and depreciation?

    Because very few assets last forever, one of the main principles of accrual accounting requires that an asset's cost be proportionally ...
  3. Which is better, a fixed or variable rate loan?

    A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest ...
  4. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ...
Trading Center