What an RMD is

An RMD is the minimum amount that generally must leave certain tax-deferred retirement accounts each year after the applicable starting age. Withdrawals are usually included in taxable income except for basis or other tax-free portions.

  • Inventory each traditional IRA and employer plan.
  • Locate the prior December 31 balance.
  • Confirm which IRS table applies, especially when a spouse is the sole beneficiary and more than 10 years younger.
  • Ask the custodian how it reports and processes the withdrawal.

Avoid the first-year surprise

The first RMD may be delayed until April 1 of the following year in many cases, but the next RMD is still generally due by December 31 of that same following year. That can create two taxable distributions in one calendar year. Review the choice with a qualified tax professional.