Required Minimum Distribution - RMD

AAA

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.


INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Stretch IRA

    An estate planning concept that is applied to extend the financial ...
  2. Qualified Distribution

    Distributions made from a Roth IRA that are tax and penalty free. ...
  3. Individual Retirement Account - ...

    An investing tool used by individuals to earn and earmark funds ...
  4. IRA Adoption Agreement And Plan ...

    A contract between the owner of an individual retirement account ...
  5. Ordering Rules

    The order in which Roth IRA assets are distributed. Assets are ...
  6. Non-Qualified Distribution

    1) A distribution from a Roth IRA that occurs before the Roth ...
RELATED FAQS
  1. When can I withdraw my IRA money?

    There are several ways to withdraw funds from an individual retirement account. Forbes advises that withdrawing funds should ... Read Full Answer >>
  2. 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 >>
  3. 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 >>
  4. 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 >>
  5. 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 >>
  6. What do you do for a non-spouse beneficiary receiving a required minimum distribution ...

    Unfortunately, a non-spouse beneficiary is not allowed to rollover assets from a qualified plan. Therefore, purchasing an ... Read Full Answer >>
  7. I am self-employed and do not need most of my IRA RMD for expenses. Can I reinvest ...

    You can use your required minimum distributions (RMDs) to fund your Roth IRA as a Roth IRA contribution. This is because ... Read Full Answer >>
Related Articles
  1. Taxes

    Preparing For Retirement Plan RMD Season

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

    An Overview Of Retirement Plan RMDs

    Make your deadlines for required minimum distributions and save more of your nest egg.
  3. Taxes

    6 Important Retirement Plan RMD Rules

    Paying taxes is inevitable - that's why you need to learn about the rules for required minimum distributions.
  4. Options & Futures

    Strategic Ways To Distribute Your RMD

    We give you some tips on preserving your nest egg in the face of unavoidable withdrawals.
  5. Retirement

    3 Steps To Take If You Miss Your RMD Deadline

    If you fail to take the required minimum distribution from your retirement account, you need to take proper steps.
  6. Taxes

    5 Retirement Plan Moves To Make Before Year-End

    Make sure all your loose ends are tied with these simple reminders and tips for your plans.
  7. Taxes

    Avoiding Mistakes In Required Minimum Distributions (RMD)

    If you don't calculate your required minimum distributions accurately, you might have to pay an excise tax.
  8. Taxes

    How To Use Your IRA As A Last-Minute Tax Deduction

    While some people are stressing over their taxes, there is a big advantage to delaying the process: You can maximize your 2014 contributions to your IRA.
  9. Retirement

    Best IRA Accounts For Beginners

    Opening your first IRA should be just an early step in your ongoing financial education, for the more help you need, the higher fees you're likely to pay.
  10. Retirement

    How (And Why) To Open an IRA Now

    Take these simple steps to set up an Individual Retirement Account that will save you tax money and set you up for the future.

You May Also Like

Hot Definitions
  1. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  2. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  3. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  4. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
  5. Preference Shares

    Company stock with dividends that are paid to shareholders before common stock dividends are paid out. In the event of a ...
  6. Accrued Interest

    1. A term used to describe an accrual accounting method when interest that is either payable or receivable has been recognized, ...
Trading Center