Page 20 - Means Wealth 2020/2021 Perspectives

REQUIRED MINIMUM DISTRIBUTIONS

he IRS decrees that everyone must start taking Required Minimum
T Distributions (RMDs) from Traditional IRAs and workplace retirement
plans (e.g., 401(k) or 403(b) plans) upon turning a certain “retirement
age”. This “retirement age” is 70 ½ for people who reached age 70 ½
prior to 2020 and age 72 for people who reached age 70 ½ as of 2020 or
later. The deadline for taking RMDs is December 31 st each year. You may,
however, delay taking your first RMD until April 1 st of the year after you turn
“retirement age”. If you delay this first distribution, you will have to take your
first and second RMD in the same year.
For your workplace retirement accounts, if you are still working and don’t
own 5% or more of the business you are employed by, you may be able to
delay taking an RMD until April 1 st of the year after you retire. This does not
apply to IRAs or plans with companies where you no longer work.
This deadline is important to remember, because regardless of your account
type, the IRS penalty may be severe — 50% of the amount not taken on time.
You calculate your RMD by dividing your tax-deferred retirement account
balance as of December 31 st of last year by your life expectancy factor.

Your life expectancy factor is derived from the IRS Uniform Life Expectancy
Table. However, if your spouse is the only primary beneficiary and he or she

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