how much to withdraw from ira (RMD)

[frank]

I have an ira and have heard that at age 701/2 you have to start to withdraw from it. does anyone know the percentage of withdrawal I will have to make this year? not familiar with the rules for ira mandatory withdrawal. I would also like to know if it is the year you turn 70 1/2 or the year following. thanks

frank

 

[racy]

All the answers to your questions are at the IRS' website:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

 

[braumeister]

Not hard to figure this out.

You need to take the first withdrawal in the year you turn 70.5.

Take your total IRA balance in all accounts (except Roths) on Dec 31 of the prior year and divide it by the factor next to your age in the table.

So if you had $100,000 in traditional IRAs on Dec 31 of last year (your brokerage will send you the form with the exact number) and you turn 70.5 this year, you would divide 100,000 by 27.4 to get $3,649.64 which is what you would take as your RMD by Dec 31 of this year.

You could delay the first one a few months into next year, but then you would have to take both that and next year's RMD in that year.

IRA Required Minimum Distribution Worksheet

 

[kannon]

This is my go to reference. https://www.irs.gov/pub/irs-pdf/p590b.pdf

IRS provides distribution periods based on age (see above publication, table III). For instance, have $100k in IRA, distribution period = 25. Therefore would have to withdraw a RMD of $4k. Lot of different scenarios covered in IRS publication - very detailed, well written.

As far as when, from the IRS publication, "If you are the owner of a traditional IRA, you must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70 1/2."

 

[target2019]

Your institution probably has an online calculator to compare results you get from the worksheet.
Takes a moment extra, and always a good idea to double check your work against another source.

 

[COcheesehead]

Your institution probably has an online calculator to compare results you get from the worksheet.
Takes a moment extra, and always a good idea to double check your work against another source.

+1 many brokerages have tools to manage the process.

 

[target2019]

I'd like to believe that you could just ask an institution to calculate and send RMD each year.

 

[kaneohe]

some fine tuning points: as mentioned previously,if you are turning 70.5 this yr, you would use your yr.end balance from last yr to determine the RMD. You would use your age at the end of this yr to determine your factor. For example if your turn 70.5 in the first half of this yr, you will be 71 at the end of the yr; however if you turn 70.5 in the 2nd half of the yr, you will be 70 at the end of this yr.........the factors are slightly different.

Also if you have a spouse who is > 10 yrs younger and is the sole beneficiary of your IRA, you use a different table (II) instead of the normal one (III).

Your broker can calculate this for you but it would be good to check.

 

[REWahoo]

frank, this recent RMD thread might also be helpful: http://www.early-retirement.org/forums/f28/rmd-nuts-and-bolts-84909.html#post1823092

 

[braumeister]

You would use your age at the end of this yr to determine your factor.

Excellent clarification; thank you.
Actually, the IRS says you use your age on your birthday this year, which is the same as what you said here.

 

[kaneohe]

Excellent clarification; thank you.
Actually, the IRS says you use your age on your birthday this year, which is the same as what you said here.

and thanks for the IRS terminology (must not have ever read that) since it's a more precise way of saying it........some might think of a birthday as analog so at the end of the yr,they might think they are 70.8 yrs old,round it up to 71 and use the factor for 71 from the table when they should be using only the whole number and discarding the decimal.

 

[tmm99]

I am far from RMD, but I noticed FIDO RIP shows how much withdrawals need to be made (click on the +Withdrawals after clicking on Table) assuming you have a specified amount left to spend, so that gives me some ideas.

 

[Moemg]

I'd like to believe that you could just ask an institution to calculate and send RMD each year.

Vanguard does this .They tell you what it will be ,recommend the tax to withhold and it all happens automatically .