3rd Quarter 2015

Retiree Corner: RMD Reminders

RMD RemindersYou generally need to take required minimum distributions (RMDs) from your traditional IRAs and other retirement-savings accounts, such as your 401 and 457 plans by Dec. 31 every year after you turn 70½. If you miss the deadline, you could face a tax penalty of 50 percent of the amount you should have withdrawn.

You have until April 1 of the year after turning age 70½ to take your first RMD, but still need to take your second RMD by Dec. 31 of that year. Having two RMDs in the same year could bump your income into a higher tax bracket, so plan carefully.

If you're working at 70½, you still have to take RMDs from your traditional IRAs and former employer's retirement plans, but you don't have to take RMDs from your current employer's retirement plan until you leave your job.

After you turn 70½, ICMA-RC will automatically send you the amount you need to withdraw from your 457 and 401 plans by the end of the year, if you haven't withdrawn the required amount yet (if you are no longer working in that job). ICMA-RC calculates the required distributions for traditional IRAs, too, but doesn't automatically send the money (you can take those withdrawals from any traditional IRA account). You can also ask ICMA-RC to distribute your RMDs in installments throughout the year. For an estimate of your RMD, check out ICMA-RC's RMD calculator at www.icmarc.org/rmdcalc.

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