Required Minimum Distributions
Required minimum distributions (RMDs) are the amounts that must be withdrawn from most tax-deferred retirement savings accounts on an annual basis beginning. In most cases, RMDs must begin by April 1 following the year retirement plan participants reach age 70.5. Ordinary income tax must be paid on those withdrawals.

RMDs apply to the following type of plans:

  • Traditional IRAs
  • SEP IRAs
  • SIMPLE IRAs
  • Qualified plans, including 401(k) plans
  • 403(b) plans
  • 457 plans
  • SIMPLE 401(k)s

There are no RMDs for Roth IRAs, but they are required for any type of employer-sponsored Roth plan.

These RMDs are determined by dividing the prior year-end fair market value (FMV) of the retirement account by the applicable distribution period or life expectancy.

Some qualified plans will allow certain participants to defer beginning their RMD until they retire, even if they are older than age 70.5. Qualified plan participants should check with their employer to determine whether they are eligible for this deferral.
 



Retirement Rules

Related Articles
  1. Financial Advisor

    Tips on How to Delay RMDs for Working Clients

    Qualified plan participants who work past age 70½ can delay taking required minimum distributions if they qualify. Here's how.
  2. Financial Advisor

    What Baby Boomers Need to Know About IRA RMDs

    Mandatory minimum distributions from traditional IRAs and qualified plans cannot be avoided. But there are several ways to minimize their impact.
  3. Financial Advisor

    How to Save Clients from RMD Aggregation Mistakes

    Advisors can help clients avoid required minimum distribution mistakes in their retirement plans.
  4. Retirement

    Inheriting an IRA: Tax Rules You Should Know

    Don’t get hit with a 50% penalty because you don’t know the required minimum distribution (RMD) rules for IRA beneficiaries.
  5. Retirement

    Retirement Plan Solutions For 70+ Workers

    If you’re still working in your 70s, you’re probably trying to seal a crack in your nest egg, or you just don’t want to retire.
  6. Financial Advisor

    Top Tips for Advising Clients on RMD Strategies

    Required minimum distributions are a fact of life for those 70.5 and older. Here's how to implement the best strategies for clients.
  7. Retirement

    How an IRA Works After Retirement

    You've read a lot about saving for your future retirement with IRAs. But what happens to the account when the future is here, and you actually retire?
  8. 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.
Frequently Asked Questions
  1. What is the difference between yield and return?

    While both terms are often used to describe the performance of an investment, yield and return are not one and the same ...
  2. 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 ...
  3. 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 ...
  4. 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 ...
Trading Center