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John Burnside

Required Minimum Distributions (RMDs)

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A Required Minimum Distribution (RMD) is the minimum amount you must withdraw from your retirement account each year.

Minimum distribution rules in this post apply to:

  • Traditional IRAs
  • SEP IRAs
  • 401(k) Plans
  • 403(b) Plans
  • 457(b) Plans
  • Profit Sharing Plans
  • Other defined contribution plans

When to start an RMD

An account owner needs to start his/her withdrawals when they reach the age of 70 ½. The first RMD must occur by April 1st of the year after you turn 70 ½ . However, if you still participate in a 401(k), profit-sharing, 403(b), or other defined contribution plan, you can delay taking the RMDs until you retire (unless you own 5% or more of the sponsoring business).

When to take an RMD (after the first time)

Normally, you must withdraw your RMD by December 31.

Tax Tip

Don’t wait until April 1st for the first RMD. This will cause you to take both the first and second RMD in the same year. Thus, increasing your tax burden. Instead, your first RMD can be taken out by December 31st of the year you turn 70 ½.

Calculating the RMD

Take the account balance at the end of the previous year and divide it by the distribution period from the IRS’s “Uniform Lifetime Table”.

Previous Year-End Balance/Distribution Period=RMD

Penalties for failing to take RMD

A 50% excise tax is assessed on untaken RMD amounts.



If legal, tax, or other professional advice is required, the services of a competent professional should be sought. This post should not be considered investment advice. This information is subject to change and/or be edited. Past performance is not a guarantee of future results.

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