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Top Things You Need to Know About Required Minimum Distributions (RMDs)

  1. What is an RMD? A required minimum distribution is the minimum amount that you must withdraw from your IRA or retirement plan account each year.
  1. When do I have to take an RMD? You need to take an RMD each year after you reach age 72 or age 70 ½ if you reach age 70 ½ before January 1, 2020. There are lots of other rules around this, contact us to make sure you know what they are!
  1. How do I know how much money I need to take out to satisfy my RMD requirement? Your IRA or retirement plan custodian may provide you with this amount, but it is your responsibility to make sure the amount is correct (you can also contact your trusted CPA and tax adviser to help you!).
  1. What happens if I don’t take an RMD but I was supposed to? You will have to pay a 50% penalty on the amount not withdrawn. Ouch!
  1. Do I have to pay tax on RMDs? In most situations, yes, you are taxed on the amount withdrawn.
  1. What are the next steps I should consider? You should contact your trusted CPA and tax adviser. We have lots of ways that we can help clients navigate the complexities of RMDs, such as:
    • Helping determine if it makes sense to take a Qualified Charitable Distribution, which allows you to make a donation to charity while also satisfying your RMD requirement.
    • Or helping determine if it makes sense to convert some of your IRA to a Roth IRA. There are many advantages of converting your IRA to a Roth IRA, but you should also consider the costs.

Start a conversation with us and let us show you how we can help you:

Christopher Sternau, CPA, CFP®

Vice President


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