What to know about RMDs


I've received several questions from readers about required minimum distributions from IRAs and 401(k) plans, so I'm taking this space to address them.

Q: I am 72, and I expect to retire in 2019. When will I have to take required minimum distributions?


A: The answer depends on the retirement account type. If the account is a 401(k) plan sponsored by your current employer, your first RMD must be taken by April 1 the year after you retire. Accordingly, if you retire in 2019, you will have to take an RMD distribution by April 1, 2020. However, in subsequent years your RMD distribution would be required by year-end; so your second RMD in that 401(k) plan must be taken by Dec. 31 2020.

If you have an IRA, your first RMD should have been taken by April 1 of the year following the year you reached age 70 1/2.


Q: I have multiple 401(k)s and also a traditional IRA. Can I take one RMD covering all of the RMD requirements.

A: No. For each separate 401(k), you must take separate RMDs. You must also take a separate RMD for your traditional IRA. Those who have multiple traditional IRA accounts may determine what the total RMD is for all of the IRA accounts and take an RMD from one of the IRA accounts to cover all the IRA RMD requirements.

The bottom line is that if you have two 401(k)s and one IRA account, you must make three separate RMDs.

Q: I have both 403(b) accounts and traditional IRA accounts. Can I take an RMD withdrawal from my IRA to satisfy my RMD requirements for my 403(b) accounts?

A: No. RMD requirements to satisfy 403(b) RMD withdrawals must be made from the 403(b) accounts. If you have more than one 403(b) account, you can make one withdrawal from one of the 403(b) accounts to satisfy all of the RMD requirements for the 403(b) accounts. However, you must make the RMD withdrawal from the traditional IRA account separately.

Q: I am 69, and I have a 401(k) account. I intend to keep working until age 73 or so. Will I have to make RMD withdrawals from my 401(k) when I reach 70 1/2? If so, will I be able to postpone RMDs on my IRA accounts also?

A: As long as you are still working for the employer offering you the 401(k), you can postpone your RMD for the 401(k) until the year after you stop working for that employer. However, the RMD requirements for your traditional IRA are independent. As soon as your reach 70 1/2, you must plan to start taking RMD distributions required of your IRA accounts.

Q: I am planning to name my spouse as the sole beneficiary of my IRA. He is more than 10 years younger, so I intend to use the table which allows a slower withdrawal. Where is this information specified in IRS publications?

A: On page 7 of the IRS publication 590-B, there is a discussion of this option. You could go to the Internet and search for "IRA Required Minimum Worksheet" for more information.

If you have additional questions about the regulations regarding RMDs, I recommend that you Google "Retirement Plan and IRA Required Minimum Distribution FAQs." The IRS answers many questions about RMDs and refers readers to other IRS publications that can answer their questions.

Many believe it's in their best interest to wait until December to take their RMDs. This approach does allow you more time to earn income on your investments. However, there is a potential downside, as investors have seen in 2018. By waiting until year's end, you run the risk of having to make withdrawals at a time when your portfolio has fallen in value.

I have had to take RMDs for several years. I make it a habit of taking throughout the year, especially when specific investments are doing well. I would rather sacrifice some income than run the risk of being forced to take distributions when the markets are falling.


Elliot Raphaelson welcomes your questions and comments at raphelliot@gmail.com.

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