April 1 is the last day you can take your required minimum
distribution (RMD) for 2017 from your traditional IRAs. If you reached age 70½
last year, this is a big deal.
If you reached age 70½ last year, April 1 could be an
important deadline. It's the last day you can take your required minimum distribution
(RMD) for 2017 from your traditional IRAs. If you miss that deadline, the
penalty may be a 50 percent excise tax on the amount you should have withdrawn.
How
the rules work
Once you reach age 70½, you must start taking annual
distributions from your traditional IRAs. Normally these distributions must
occur by Dec. 31 of each year. But a special rule lets you defer your very
first RMD until April of the year after you reach age 70½. So if you turned 70½
last year, April 1 is the deadline for your 2017 distribution. Be aware that
you'll still need to take your 2018 RMD before the end of this year. Note that
RMD rules don't apply to Roth IRAs.
Generally, the amount of the RMD for any year is based on
your age. You take the balance in all your traditional IRAs as of the last day
of the previous year, and divide by a factor representing your life expectancy.
The IRS has published a standard life expectancy table to use in the
calculation. Special rules might apply if your spouse is more than 10 years younger
than you are.
RMDs
and tax planning
Because all or part of your distribution may be taxable
income, it is important to include RMDs in your tax planning. Ideally you
should start planning for RMDs several years before you reach age 70½. But
whether you're planning in advance or looking at a distribution on April 1,
contact our office at (518) 798-3330 for more detailed advice.
If you're still working, this deadline may also apply to
your other retirement accounts.
