What are Required Minimum Distributions (RMD's) and how are they calculated?
The IRS doesn't allow you to keep funds indefinitely in your IRA's (traditional, SEP, & SIMPLE) or 401k's (including 403b's, profit-sharing or other defined contribution plan).
It's generally mandatory you take Required Minimum Distributions (RMD's) from these accounts in the year you reach age 72 (73 if you reach age 72 after 12/31/2022). If your spouse is the sole beneficiary of your IRA and he/she is more than 10 years younger than you, different rules apply.
Penalties for not taking this minimum distribution can be quite large.
You can always withdraw more than the minimum, but are required to take at least the amount calculated per RMD worksheets.
Withdrawals are included in taxable income.
Click here to visit our tools page, which includes an RMD calculator.
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