Tax Planning
Required Minimum Distributions: A Practical Planning Checklist
Required minimum distributions are more than a deadline. The amount, account, withholding, tax impact, and family goals should fit into one coordinated retirement plan.
Know which accounts and deadlines apply
Traditional IRAs, SEP IRAs, SIMPLE IRAs, and most employer retirement plans generally require minimum distributions beginning with the year an owner reaches age 73. The first distribution can usually be delayed until April 1 of the following year, but that may create two taxable distributions in the same calendar year.
Roth IRAs generally do not require lifetime RMDs for the original owner, while inherited Roth and traditional accounts follow beneficiary-specific rules. Employer plans can also have different timing provisions, including a possible retirement-based delay for some employees who are not 5% owners.
Build the distribution from the prior year-end balance
For most IRA owners, the annual RMD starts with the account value on December 31 of the prior year and an applicable IRS life-expectancy factor. A custodian may calculate or report the amount, but the account owner remains responsible for taking the correct distribution on time.
If you own several IRAs, the calculation is generally performed for each account, while the total IRA RMD may often be taken from one or more of those IRAs. Employer plans can have different aggregation rules, so confirm the process with each plan administrator before moving money.
Coordinate the RMD with the rest of the tax plan
An RMD is generally taxable as ordinary income unless an exception applies, so it can affect withholding, estimated taxes, Medicare-related income thresholds, charitable planning, and the amount available for portfolio withdrawals. The right question is not only how much must be distributed, but what the distribution should accomplish.
A qualified charitable distribution may count toward an IRA owner's RMD when the requirements are met. Beneficiary designations and inherited-account rules also deserve a separate review because the distribution schedule after death can affect both family members and future tax years.
Planning perspective
Key planning takeaways
- Confirm which accounts require an RMD and the applicable deadline before year-end.
- Use the prior December 31 balance and the correct IRS life-expectancy table when calculating the amount.
- Coordinate withholding, charitable gifts, Medicare-related income, cash flow, and beneficiary rules with the distribution decision.
Direct answers
Questions families ask
When do required minimum distributions generally begin?
For most traditional IRA and retirement-plan owners, RMDs generally begin with the year the owner reaches age 73. The first distribution may usually be delayed until April 1 of the following year, which can result in two taxable distributions in that year.
Can I take an IRA RMD from just one IRA?
IRA owners may generally aggregate the RMDs from their IRAs and take the total from one or more IRAs, but employer plans and inherited accounts can follow different rules. Confirm the approach with the plan administrator or custodian.
Can a charitable gift satisfy an RMD?
A qualified charitable distribution may count toward an IRA owner's RMD when the legal and timing requirements are satisfied. Confirm eligibility and reporting with the IRA custodian and tax professional.
Are Roth IRAs subject to lifetime RMDs?
An original owner generally does not have lifetime RMDs from a Roth IRA, but beneficiaries of Roth IRAs may have distribution requirements after the owner's death.
Authoritative resources
Verify the rules that shape the decision.
This educational overview is not individualized financial, tax, or legal advice. Decisions should be evaluated using your complete circumstances and appropriate licensed professionals.
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Use this insight as a starting point, then build a retirement strategy around your own assets, taxes, and family goals.