Required minimum distribution (RMD)
You must start taking withdrawals from your retirement accounts when you turn 72 years old. This applies to traditional IRAs, SEP IRAs, SIMPLE IRAs, 401(k) plans, 403(b) plans, 457(b) plans, profit sharing plans, and other defined contribution plans. Roth IRAs do not require withdrawals until after the death of the owner. Your required minimum distribution (RMD) is the minimum amount you must withdraw from your account each year. This is taxable income, unless it comes out of a Roth account.
The RMD for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.
For IRAs, you must begin withdrawals by April 1 of the year following the calendar year in which you reach age 70½ (6 months after your 70th birthday). For 401(k), profit-sharing, 403(b), or other defined contribution plan, you begin on April 1 following the later of the calendar year in which you reach age 70½, or retire. For each subsequent year after your required beginning date, you must withdraw your RMD by December 31.
Example #1: Your 70th birthday was June 30, 2017. You reached age 70½ on December 30, 2017. You must take your first RMD (for 2017) by April 1, 2018.
Example #2: Your 70th birthday was July 1, 2017. You reached age 70½ on January 1, 2018. You do not have an RMD for 2017. You must take your first RMD (for 2018) by April 1, 2019.
The first year following the year you reach age 70½ you will generally have two required distribution dates: an April 1 withdrawal (for the year you turn 70½), and an additional withdrawal by December 31 (for the year following the year you turn 70½). To avoid having both of these amounts included in your income for the same year, you can make your first withdrawal by December 31 of the year you turn 70½ instead of waiting until April 1 of the following year.
Example: John reached age 70½ on August 20, 2017. He must receive his 2017 required minimum distribution by April 1, 2018, based on his 2016 year-end balance. John must receive his 2018 required minimum distribution by December 31, 2018, based on his 2017 year-end balance.
If John receives his initial required minimum distribution for 2017 on April 1, 2018, then both his 2017 and 2018 distributions will be included in income on his 2018 income tax return.
If you do not take any distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required. This requires the completion of tax form 5329.
AFTER THE OWNER DIES
For the year of the account owner’s death, use the RMD the account owner would have received. For the year following the owner’s death, the RMD will depend on the identity of the designated beneficiary.
Beneficiaries calculate RMDs using the Single Life Table (Table I, Appendix B, Pub 590-B, https://www.irs.gov/publications/p590b#en_US_2018_publink1000231217). The table shows a life expectancy based on the beneficiary’s age. The account balance is divided by this life expectancy to determine the first RMD.
Spouses who are the sole designated beneficiary can treat an IRA as their own, or base RMDs on their own current age, base RMDs on the decedent’s age at death (reducing the distribution period by one each year), or withdraw the entire account balance by the end of the 5th year following the account owner’s death (if the account owner died before the required beginning date). If the account owner died before the required beginning date, the surviving spouse can wait until the owner would have turned 70½ to begin receiving RMDs.
Individual beneficiaries other than a spouse can withdraw the entire account balance by the end of the 5th year following the account owner’s death (if the account owner died before the required beginning date), or calculate RMDs using the distribution period from the Single Life Table.
Source: IRS Retirement Topics - RMDs