{"id":31558,"date":"2017-12-06T15:59:27","date_gmt":"2017-12-06T20:59:27","guid":{"rendered":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/?p=31558"},"modified":"2017-12-07T17:00:30","modified_gmt":"2017-12-07T22:00:30","slug":"business-report-retirement-account-rmds","status":"publish","type":"post","link":"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2017\/12\/business-report-retirement-account-rmds\/","title":{"rendered":"Business Report: Retirement Account RMDs"},"content":{"rendered":"
\"\"
David Cumming is a senior vice president and financial advisor with Morgan Stanley.
Courtesy Mogan Stanley<\/figcaption><\/figure>\n

By David L Cumming<\/p>\n

One retirement fund decision that the government makes for you is requiring that you withdraw at least some of your funds annually, depending on your age and the account type. This is known as a required minimum distribution, or RMD, and it must be taken from your retirement accounts (other than Roth IRAs) by Dec. 31 each year, starting the year after you turn age 70\u00bd.<\/p>\n

Generally, an RMD is determined using uniform life expectancy tables that take into consideration the account owner\u2019s and\/or account beneficiary\u2019s age and marital status, as well as their account balance(s) as of December 31 of the year prior to the distribution year.<\/p>\n

The exact distribution amount changes from year to year. It is calculated by dividing an account\u2019s year-end value by the distribution period determined by the Internal Revenue Service (see table below). For instance, an account holder with a $100,000 traditional IRA at age 75 would need to withdraw $4,367 ($100,000\/22.9), or 4.37 percent of the total balance.<\/p>\n

Here are some important considerations for those entering the distribution phase of their investing lives.<\/p>\n

<\/p>\n

You can pick the account(s) you withdraw from …<\/b><\/p>\n

If you have more than one of the same type of retirement account–such as multiple traditional IRAs–you can either take individual RMDs from each account or aggregate your total account values and withdraw this amount from one account. As long as your total RMD value is withdrawn, you will have satisfied the IRS requirement.<\/p>\n

\u2026 Unless they are two different types of accounts.\u00a0<\/b><\/p>\n

If you own more than one type of account, such as an IRA and an employer-sponsored plan account, you\u2019ll need to calculate your RMD for both types of accounts separately and take the proper amount from each.<\/p>\n

You may be able to defer if you\u2019re still working.<\/b><\/p>\n

If you are still employed at age 70\u00bd, you may be able to defer taking RMDs from your employer-sponsored plan until after you retire. You\u2019ll need to check with your employer to see if this applies to you.<\/p>\n

The implications can be severe for failing to comply.<\/b><\/p>\n

If you fail to take your full RMD, the IRS may assess an excise tax of up to 50 percent on the amount<\/p>\n

you should have withdrawn and you\u2019ll have to take the distribution.<\/p>\n

Taxes are still due upon withdrawal.\u00a0<\/b><\/p>\n

You will probably face a full or partial tax bite for your distributions, depending on whether your traditional IRA was funded with nondeductible contributions. Note also that the amount you are required to withdraw may bump you up into a higher tax bracket.<\/p>\n

You can donate your RMDs to charity<\/b>.<\/p>\n

If you are an IRA owner you can contribute up to $100,000 of your IRA directly to qualified charities and have it count toward your RMD. If you\u2019ve inherited an IRA, these donations are allowable as long as you are over age 70\u00bd.<\/p>\n

Roth IRAs are exempt<\/b>.<\/p>\n

If you own a Roth IRA, you don\u2019t need to take an RMD. However, note that any distributions taken from a Roth IRA do not count toward your RMD amount, and restrictions apply to the beneficiaries of inherited Roth IRAs. Also note that the RMD rules do apply to Roth 401(k)s.<\/p>\n

Like many tax rules, those governing minimum distributions can be complex. Don\u2019t wait till end of year to begin calculating your RMD and withdrawing funds.<\/p>\n

Cumming is a senior vice president and financial advisor with Morgan Stanley.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

By David L Cumming One retirement fund decision that the government makes for you is requiring that you withdraw at least some of your funds annually, depending on your age and the account type. This is known as a required minimum distribution, or RMD, and it must be taken from your retirement accounts (other than […]<\/p>\n","protected":false},"author":196,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,9],"tags":[],"class_list":["post-31558","post","type-post","status-publish","format-standard","hentry","category-business-news","category-business-reports"],"yoast_head":"\r\nBusiness Report: Retirement Account RMDs - Saratoga Business Journal<\/title>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" href=\"https:\/\/www.saratoga.com\/saratogabusinessjournal\/2017\/12\/business-report-retirement-account-rmds\/\" \/>\r\n<meta property=\"og:locale\" content=\"en_US\" \/>\r\n<meta property=\"og:type\" content=\"article\" \/>\r\n<meta property=\"og:title\" content=\"Business Report: Retirement Account RMDs - Saratoga Business Journal\" \/>\r\n<meta property=\"og:description\" content=\"By David L Cumming One retirement fund decision that the government makes for you is requiring that you withdraw at least some of your funds annually, depending on your age and the account type. 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