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Schulfer & Associates, LLC

5 Required Minimum Distribution Facts

5 Required Minimum Distribution Facts

We get all sorts of questions regarding Required Minimum Distributions.  We put a substantial amount of effort into planning for and effecting the mandatory withdrawals that must occur from certain retirement accounts.  If you are an IRA (Individual Retirement Account) owner, here are five RMD facts to be mindful of.

  1. RMDs must be completed by the end of the calendar year.  While the IRS allows us to make contributions to IRAs until our tax deadline (ex:  April 15th), required distributions must be completed by December 31 each year.
  2. If you have multiple IRA accounts, your RMD is based on the aggregate total of the IRAs, however, you have the option to take the total distribution from any of them, or even just one IRA if you wish. 
  3. If you have inherited IRAs and your own IRAs and are subject to RMDs, you must take RMD distributions from both the inherited IRAs and your own IRAs.  In other words, the IRS counts inherited IRAs separate from your own IRAs.
  4. ROTH IRAs are not subject to RMDs, unless they are inherited from a non-spouse beneficiary.  Then, even ROTH IRAs are subject to RMDs.  While they may not be taxed, required distribution rules apply.
  5. Your RMD may not be rolled over into another IRA or to a ROTH IRA.  You must satisfy the distribution by paying the taxes and receiving the cash.  You may reinvest the cash into a non-retirement investment account if you wish to have the money continue to grow.

Required Distributions can be complicated and there are many rules surrounding the different types of accounts they apply to.  If you are subject to RMD’s, it is worth your while to know the rules or to consult with a qualified professional, because the IRS penalty for not taking an RMD is 50% of what you should have taken. 

By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management AdvisorSM
Accredited Investment Fiduciary®

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or louann.schulfer@lpl.com.  www.SchulferAndAssociates.com

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.