Required Minimum Distribution Reminder

Posted · Add Comment

A great tax savings opportunity is the use of qualified retirement plans while working and post-retirement, rolling those assets into an Individual Retirement Arrangement (IRA).  Whether taxpayers continue to participate in an employer-sponsored plan, or have the separately-maintained IRA, the tax law requires that they take a minimum distribution from the plan each year after they turn 70 ½ years old.

The Internal Revenue Service this week issued News Release IR 2018-248 reminding taxpayers of this requirement.

Thus, taxpayers born before July 1, 1948 generally must receive Required Minimum Distribution (RMD) payments from their Individual Retirement Arrangements (IRAs) and workplace retirement plans [including Section 401(k) , 403(b) , and 457(b) plans] by December 31, 2018.

A special rule allows those who reached age 70 ½ during 2018 to wait until as late as April 1, 2019 to receive their first RMD. The special April 1 deadline applies only to the RMD for the first year, however. Subsequent RMDs must be received each year by the December 31 required date. Consequently, deferring the first-year payment into 2019 will result in the taxpayer having “two” taxable distributions that year.

Please contact Bob Grossman or Don Johnston with questions or comments.