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IRA Required Beginning Date (RBD)

| June 03, 2019

You can’t leave your money in an IRA forever, nor can you leave it in your 401k plan forever either.  Eventually, Uncle Sam will want to collect tax revenue on the money you have deferred into your 401k or IRA by requiring that you take taxable distributions.

The IRS code contains a provision for Required Minimum Distributions (RMDs) from tax-deferred retirement accounts which must begin when you turn age 70 ½. However, the actual Required Beginning Date, which is the latest you can delay your first RMD, can be confusing.

The Required Beginning Date (RBD) for your first Required Minimum Distribution (RMDs) is April 1st of the year following the year you turn age 70 ½.  This is latest date you can delay your first RMD.   So  to  calculate  your  Required  Beginning Date (RBD) the first step is to take your 70th birthday and add six (6) months to it.  This is the starting point for determining your RBD.  The second step is to identify April 1st of the year following the calendar year in which you turned 70 ½.  This is the date you must take your first Required Minimum Dist-ributions (RMD) at the latest.  Failure to take your RMD by this date may result in a 50% IRS penalty on the amount not taken.

Keep in mind, though, if you delay your first RMD to April 1st of the calendar year following the year you turn 70 ½ then you may have to take two RMDs in that year: one for the year you turned 70 ½ and one for the current year.  The timing of your first and second RMDs may have important implication for your tax planning strategy.