What's an RMD, and when do I start taking one?
A Required Minimum Distribution (RMD) is the minimum amount of money that must be withdrawn from a traditional retirement account every year per IRS regulations.
An RMD is required for any retirement account where you contributed pre-tax dollars (Traditional IRAs, SEP IRAs, SIMPLE IRAs, etc.). You must start taking these distributions at 73 if you turned 72 after December 31st, 2022 (See RMD eligibility here). Inherited IRAs also require RMDs. Since Roth IRAs are funded with post-tax dollars, they don’t require a minimum distribution until the owner of the account dies.
RMDs are calculated by taking the retirement account’s prior year-end fair market value and dividing it by the life expectancy factor made available by the IRS. RMDs must be calculated for each retirement account (if you have multiple retirement accounts), but you may be able to withdraw the total RMD amount from just one account. The IRS has a worksheet to assist taxpayers in calculating the amount that needs to be withdrawn each year.
Does this sound like a lot to keep track of? Don’t worry, every year, our team reaches out to the clients who need to take an RMD. We will confirm the amount to withdraw and which account you would like the distribution to be deposited into. We can process it on your behalf as well.
Please let us know if you have any questions! You can reach out to your dedicated advisory team at (503) 905-3108.