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Required Minimum Distributions (RMDs) and Required Death Distributions (RDDs)

Your required minimum distribution (RMD) or required death distribution (RDD) is the minimum amount you must withdraw from your qualified account.

You had the benefit of tax deferred growth during your working years or during the working years of the person whose tax qualified account you inherited. The RMD or RDD is the IRS designated time and amount for taxes to be paid. Yearly distributions required must be done for each and every account that meets the criteria. The CARES Act waived Required Distributions for 2020 but distributions are required for 2021, 2022, and going forward. The amounts are calculated using the December 31st balance from the prior year.


Who is required to take a Required Distribution?

  • Anyone over the age of 72 with a retirement account (Traditional IRA, SEP IRA, Simple IRA, 401k, 403b,457, profit sharing plans, and other defined contribution plans).
  • First time recipients must take their first distribution by April 1st of the year following attaining 72.  For example: You reached age 72 on July 1, 2022. You must take your first RMD (for 2022) by April 1, 2023, with subsequent RMDs on December 31st annually thereafter.  If you wait until April 1st you will end up needing to take 2 distributions in that year which means double the taxable ordinary income for that tax year.
  • Beneficiary owner of Tax Qualified Retirement accounts inherited.  (Inherited IRA, Roth IRA, 401k, 403b, 457 plans)


How do RMDs and RDDs Work?

  • Income taken out as a required distribution is taxed as ordinary earned income.
  • The IRS requires the correct RMD amount, it doesn’t matter which of your accounts you take it from. Your required distributions can be taken out of multiple accounts or one account, but it must equal the total required distribution for all accounts.
  • You may take out more than the required amount, but you should never take less.
  • Any excess distributions will also be taxed as ordinary income.


What Happens if I Do Not Take My Required Distribution?

  • Failure to take the full Required Distribution can result in 50% excise tax on the amount not distributed.
  • Advanced planning on when and how much to take out of tax qualified plans is a great idea so there are no unhappy surprises at tax time.
  • Tax questions should be referred to a tax advisor regarding your individual income tax scenario.


How is an RMD Calculated?

  • The IRS calculation is based on your birthdate and your account balance on December 31st of the previous year. For example: In 2022 we look at the December 31, 2021 balance for all accounts requiring a distribution.
  • To see an estimate of your RMD check out our easy calculator: RMD Calculator


How is an RDD Calculated?

  • The calculation is based on your birthdate and the birth and death date of your inherited account's original owner and who you inherited it from.
  • If you inherited an IRA from your spouse, the rules and calculations are different.
  • The SECURE Act made many changes to inherited accounts. This IRS Publication outlines the changes.


Who Can Calculate my RMD and RDD?