Products: Traditional IRA Required Minimum Distributions
IRAs were created as a means to supplement an individual’s income for retirement. As long as assets remain in an IRA, tax on deductible contributions and earnings is deferred. However, the law requires an IRA owner to begin taking required minimum distributions (RMDs) upon reaching his/her age 70½ year.
When must RMDs be withdrawn?
An IRA owner’s failure to satisfy an RMD will result in a 50 % excess-accumulation penalty tax on the amount of the RMD not withdrawn. An IRA owner reports and pays this tax by filing IRS Form 5329 and attaching it to his/her federal income tax return for the year of the excess accumulation.
The formula for calculation an RMD is:
The Account Balance, or Fair Market Value (FMV), is generally the IRA balance as of December 31 of the prior calendar year.
The Distribution Period is determined by using an IRA owner’s age as of the end of the year. Using this age, you then obtain the distribution period by using the Uniform Lifetime Table and doing the math.
However, if an IRA owner’s sole primary beneficiary is his/her spouse for the entire year (except in cases of death or divorce) and that spouse is more than 10 years younger than the IRA owner, the distribution period will come from the Joint Life Table. If you fall under these rules, contact us or your tax advisor for details regarding your RMD calculation.
IRS regulations allow an IRA owner to total his/her RMD amounts from all traditional IRAs and take the aggregate amount from any traditional IRA he/she chooses. This is a benefit to you as an IRA owner, since you will be able to deplete your lowest performing investments first.
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First Minnetonka Investment Center is a registered branch of LaSalle St. Securities, LLC.
Securities are offered through LaSalle St. Securities, LLC., Advisory Services offered through LaSalle St. Investment Advisors, LLC.
LaSalle St. Investment Advisors, LLC is affiliated with LaSalle St. Securities, LLC.- a registered broker/dealer.
Tam Hubert, CFP® and Kristi Remus are registered representatives of LaSalle St. Securities, LLC.
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