One of the recent provisions of the SECURE Act of 2019 was delaying the age for required minimum distributions (RMDs) from age 70½ to 72, which is a requirement by the Internal Revenue Service (IRS). Individuals who turned 70½ on or before December 31, 2019, will continue with RMDs under the pre-SECURE Act rules.
National Financial Services (the custodian for accounts held at Commonwealth Financial Network) mail RMD notices at the end of September each year to account owners who still appear to need to fulfill part or all of the RMD for the current year. If you receive a notice and are unsure if you still need to fulfill your RMD for the current year, you can call Weller Group at 315-524-8000 to inquire — please reference the RMD notice and last 4 digits of your account number in the RE: section below the date on the notice.
What is a required minimum distribution (RMD)?
An RMD is the minimum amount that IRA owners must withdraw from their IRAs annually once they reach age 72.
What types of retirement accounts have RMDs?
- Traditional IRA
- SIMPLE IRA
- SEP IRA
- 401(k)
- 403(b)
- 457(b)
- Profit-sharing plans
- Roth IRA BDAs
- IRA BDAs
When am I required to begin taking RMDs?
IRA owners must take their first RMD in the year they turn age 72. However, the first RMD can be deferred until April 1 of the year following the year the account owner turns 72. For all subsequent years, the RMD for the current year must be taken by December 31 of that year. Keep in mind that if you defer your initial RMD to the year after turning 72, both the initial RMD and the current year RMD must be withdrawn within the same calendar year.
Is there a penalty for not taking an RMD?
Yes, IRA owners who fail to take their RMD in any given year are subject to a tax penalty of 50 percent of the undistributed amount.
How is an RMD calculated?
Using the December 31 market value of the IRA for the previous year, divide it by the life expectancy factor indicated in IRS Publication 590.
May I withdraw more than my RMD?
Yes; however, excess amounts withdrawn cannot be applied to satisfy RMDs for future years.
May I aggregate RMDs and withdraw them from only one account?
Yes; but the RMD must be calculated for each IRA separately, then the amounts can be combined and withdrawn from just one IRA or across all IRAs. You cannot aggregate 401(k), 457(b) and qualified plans. Below is a chart of which accounts can and cannot be aggregated:
Aggregate | Don't Aggregate |
|---|---|
| Traditional, SEP, and SIMPLE IRAs | Multiple 401(k) or 457(b) plans |
| Multiple 403(b) plans | Qualified plans and IRAs |
Multiple IRA BDAs (You can only aggregate RMDs from IRA BDAs that are inherited directly from the same individual) | IRAs and IRA BDAs |
How can I fulfill my RMD?
You can have your RMD sent to you by check or electronically to your bank account, reinvest it into a non-retirement account, gift it to an individual or organization, or send some or all of it to the IRS or your state’s tax department for tax withholding. You can also establish a systematic withdrawal plan or an automatic payout plan to ensure your RMD is fulfilled each year without having to request a withdrawal each year. You cannot roll over your RMD into another retirement account.
Contact Weller Group before December 1* for any of the following:
- Determine if you are required to take a minimum distribution in the current year
- Determine if you are on pace to fulfill your RMD by 12/31
- Request a one-time distribution to fulfill your RMD by 12/31
- Establish a systematic withdrawal plan or automatic payout plan
*Due to the high volume of business at the end of year, we ask that you contact Weller Group by December 1 so we can process requests in a timely manner.
Weller Group does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.