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April 1 RMD Deadline for Retirees Approaching Quickly

In most cases, taxpayers who turned age 70 ½ during 2017 must receive their first required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and employer-sponsored retirement plans by April 1, 2018 which is just a few days away.

Failing to take RMDs by established deadlines can trigger a hefty penalty such as 50% of the amount not withdrawn, so you want to make sure stay on top of the annual deadlines. The April 1 deadline only applies to the RMD for the first year. For all years following, they must be made by December 31 of each year.

While this RMD deadline does not apply to ROTH IRAs, it does apply to all employer-sponsored retirement plans (profit-sharing, 401(k), 403(b), and 457(b) plans) as well as traditional IRA and IRA-based plans (SEPs, SARSEPs, and Simple IRAs).

The amount that you need to withdraw is based on two factors: your age and your account value. As a reference, the IRS has created worksheets to assist with RMD calculations. If your spouse is the sole beneficiary of your IRA and he/she is more than 10 years younger than you, use this form to calculate your RMD. For all others, you can calculate your RMD using the worksheet found here.

If you have multiple accounts, please note that each account should be calculated separately and there are specific rules when aggregating RMDs. Most notably, RMDs from one type of account cannot be taken from a different type of account. You cannot, for example, aggregate your RMD from an IRA and a 401(k) plan. They must be taken separately.

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