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How To: RMDs

How To: RMDs

November 29, 2022

As we get closer to the end of the year, I wanted to put together some plain language notes and frequent questions on RMD’s. These notes will cover the majority of cases, but feel free to ask any specific questions!

  • RMD stands for Required Minimum Distribution and is when the government forces you to withdrawal a certain amount out of your IRA’s at a certain age.
  • Your RMD is calculated on your IRA account balance at the end of last year and doesn’t change throughout the year, regardless of how the market does
  • You don’t have to start taking RMD’s until you reach age 72 now (it used to be 70 ½)
  • You don’t have to take the money out of each IRA, just enough to satisfy the total RMD amount; it can be from one or multiple IRA’s.
  • The funds distributed out of your IRA is considered taxable income.  
  • If you don’t take your full RMD (which usually happens when someone forgets they have an IRA, or an annuity IRA, etc.) the penalty is 50% of what you didn’t take! Please let us know if this has happened, we’ll get you in touch with a CPA to see if we can limit the penalty
  • If you don’t need the money to live on immediately, you still need to take the distribution, we can just move it to your Non-qualified account to keep it invested
  • If we know about your IRA, we’ll be reaching out to you to make sure you take your RMD, please make sure you tell us about all of your IRA’s so we can help you calculate your full RMD
  • If we have a bank account on file, we can transfer the money to your bank directly, as well as withhold any % you would like for the IRS
  • Beneficiary IRA rules have changed quite a bit lately, so we need to assess each separately, we just need to know the date of passing and whether or not you have taken an RMD yet!

We want to make sure no one pays any IRS penalties so please expect to hear from us if you have an IRA, and let us know if you don’t see all your accounts in eMoney!