IRA rules-Required Minimum Distribution (RMD)

Due to simpler IRA rules, IRA participants can now use a uniform life expectancy table to determine their Required Minimum Distribution or RMD that will generally yield small distributions stretched over a greater number of years.

The IRS requires that individuals must take minimum IRA distributions from their Traditional IRA account(s) in the year they become age 70½ and in subsequent years. This minimum distribution as specified under IRA distribution rules is called the Required Minimum Distribution or RMD. RMD applies to all:

What are the RMD IRA rules?

All IRA owners, except those whose sole beneficiary is a spouse more than ten years younger, will use a Uniform Life Expectancy Table (which was the Minimum Distribution Incidental Benefit or MDIB Table under the old IRA rules).
IRA owners whose sole beneficiary is a spouse more than ten years younger may elect to use the regular Joint Life Expectancy Tables.
IRA owners can change beneficiaries after the Required Beginning Date (April 1st after the year in which the IRA owner attains age 70½) without increasing the RMD amount.
Beneficiaries whose life expectancies will be used to calculate post-death distributions do not have to be determined until September 30th of the year after the IRA owner's death.
The IRA may be divided into a separate account for each beneficiary and each beneficiary may use his or her own life expectancy to calculate his or her RMD.
Beneficiaries have until December 31st of the year after the IRA owner's death to decide how to take their distributions.
Mandatory lump sum IRA distributions are eliminated.
- If the IRA owner dies before attaining age 70½, and there is no designated beneficiary, then the payout period will be a maximum of five years.
- If the IRA owner dies after attaining age 70½, and there is no designated beneficiary, then the payout period will be the IRA owner's remaining single life expectancy.

When must I take the Required Minimum Distribution (RMD)?

Under the Required Minimum Distribution IRA rules, individuals must take a Required Minimum Distribution (RMD) for each year starting with the year in which the individual attains age 70½. This is known as a Distribution Calendar Year.

However, the first such RMD distribution for the first Distribution Calendar Year may be delayed until April 1st of the year following the year in which the individual attains age 70½. (This date is referred to as the Required Beginning Date.) After the first Distribution Calendar Year, Required Minimum Distributions must be taken by December 31st of each year.

Note: If an individual decides to delay his or her first Required Minimum Distribution until the Required Beginning Date (April 1st of the year after the first Distribution Calendar Year), then he or she will have two distributions in one tax year.

Thereafter, for each Distribution Calendar Year in which the IRA owner is alive and has not exhausted his or her IRA account, he or she must take a Required Minimum Distribution by December 31st.