Reminder: Some Retirees Must Take RMDs by April 1

By ASPPA Net Staff • March 28, 2016 • 0 Comments

No fooling — some retirees and IRA holders must take required minimum distributions (RMDs) by April 1. The IRS in IR-2016-48 on March 28 issued a reminder that IRA holders who turned age 70½ in 2015 must take RMDs; similarly, retirees who reached that age last year must take RMDs from workplace retirement plans.

The April 1 deadline applies to owners of:

  • traditional IRAs;
  • SEP IRAs; and
Normally, it also applies to participants in various workplace retirement plans, including:

  • 401(k)s;
  • 403(b)s; and
  • 457(b) plans.
The April 1 deadline does not apply to Roth IRAs.

The April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by Dec. 31. That means that an individual who was born after June 30, 1944 and before July 1, 1945 and who therefore turned 70½ in 2015 and receives the first required distribution (for 2015) on April 1, 2016, must still receive the second RMD by Dec. 31, 2016.

Affected taxpayers who turned 70½ during 2015 must figure the RMD for the first year using the life expectancy as of their birthday in 2015 and their account balance on Dec. 31, 2014. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices to Publication 590-B.

Most taxpayers use Table III (Uniform Lifetime) to figure their RMD; it also can be found in the appendices to Publication 590-B.

The IRS encourages taxpayers to begin planning now for any distributions required during 2016. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12b on Form 5498. For a 2016 RMD, this amount would be on the 2015 Form 5498 that is normally issued in January 2016.

More information on RMDs is available here.