Taking Your First RMD

RMD for retirement account owners:

Generally, your RMD must be taken by December 31 of the year for which it is due. However, an exception applies to your first RMD, which is due for the year in which you reach age 70 ½. Under this exception, your RMD for the year that you reach age 70 ½ can be deferred until April 1 of the following year. Caution: If you defer taking your RMD for the year you reach age 70 1/2 until the following year (taking it by April 1), you will need to take two RMD amounts for that year. That is because the second and all subsequent RMDs must be taken by December 31 of the year for which it is due. Taking two RMD amounts in one year could impact your income taxes, as it could put you in a higher tax bracket. Consult with your tax professional, who should be able to advise you on the tax impact of taking your first RMD in your 70 ½ year vs. deferring it until the next year.

Qualified plans, 403(b)s and governmental 457(b) plans

If you have funds in a qualified plan, 403(b) account or governmental 457(b) plan, and you are still employed by the plan sponsor (employer), you might be able to defer starting your RMD past age 70 ½ until after you retire.  Check with your employer or plan administrator regarding your option for deferring your RMD.

RMD For beneficiaries

If you inherited a retirement account, you must take a beneficiary RMD by the end of the year if:

• You are subject to life-expectancy distributions, or
• You are subject to the five-year rule and this is the end of the 5^th year.

For an explanation of the five-year rule, see five-year rule

Under the life-expectancy option:

• You are required to use your life expectancy if the retirement account owner died before the required beginning date (RBD)
• The longer of your life expectancy and the decedent’s remaining life-expectancy, if the retirement account owner died on or after the RBD.

Tip by Denise Appleby