Question 1

What are required minimum distributions and when do I have to take them?

Accepted Answer

Required minimum distributions (RMDs) are mandatory annual withdrawals from certain retirement accounts. They generally begin at 73, or 75 for those born in 1960 or later. Your first deadline is usually April 1 of the following year; subsequent deadlines are December 31. Some workplace plans allow delays while employed. Roth owners have no lifetime RMDs.

Question 2

How can I reduce or avoid RMDs?

Accepted Answer

Roth IRAs have no required distributions for the owner, so Roth conversions before RMDs begin can shrink future RMDs. Qualified charitable distributions can satisfy RMDs without adding to taxable income. If you are still working and do not own 5% of the company, your current employer's plan may let you delay its RMDs until you retire.

Question 3

What is the penalty for missing an RMD?

Accepted Answer

The penalty is 25% of the amount you should have withdrawn. It drops to 10% if you take the missed distribution and file a corrected return within two years. The IRS can waive the penalty for reasonable error if you fix the shortfall promptly and request relief on Form 5329.

Question 4

Do inherited IRAs have RMDs?

Accepted Answer

Often, yes. Most non-spouse heirs must empty an inherited IRA within ten years, and if the original owner had already begun RMDs, annual withdrawals are generally required during those years too. A surviving spouse can usually treat the IRA as their own, delaying RMDs until reaching their own required age.

What are required minimum distributions and when do I have to take them?