Required Minimum Distribution - RMD

DEFINITION of 'Required Minimum Distribution - RMD'

The amount that Traditional, SEP and SIMPLE IRA owners and qualified plan participants must begin distributing from their retirement accounts by April 1 following the year they reach age 70.5. RMD amounts must then be distributed each subsequent year.


BREAKING DOWN 'Required Minimum Distribution - RMD'

These required minimum distributions are determined by dividing the prior year-end fair market value of the retirement account by the applicable distribution period or life expectancy.

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

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RELATED FAQS
  1. Do variable annuities have RMDs?

    Variable annuities are not subject to required minimum distributions (RMDs) unless they are held in qualified plans, such ... Read Full Answer >>
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    There are several ways to withdraw funds from an individual retirement account. Forbes advises that withdrawing funds should ... Read Full Answer >>
  3. How is a Roth 401(k) taxed?

    A Roth 401(k) is a type of plan that offers employees the ability to contribute after-tax dollars to a qualified retirement ... Read Full Answer >>
  4. What is the "stretch IRA" concept?

    The "stretch IRA" is not a new IRA account on the market, or even a new investment concept, it is simply a wealth transfer ... Read Full Answer >>
  5. Should I start taking my RMD based on the amount in my account when I turn 70.5?

    Because your balance may have changed from December 31 to the date you reach age 70.5, using that balance may result in an ... Read Full Answer >>
  6. I'm 70.5 and still working for my own company. Can I defer starting my required minimum ...

    The option to defer starting your required minimum distribution (RMD) beyond age 70.5 is available only if the individual ... Read Full Answer >>
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    You can use your required minimum distributions (RMDs) to fund your Roth IRA as a Roth IRA contribution. This is because ... Read Full Answer >>
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    Unfortunately, a non-spouse beneficiary is not allowed to rollover assets from a qualified plan. Therefore, purchasing an ... Read Full Answer >>
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