We want to remind retirees, that those who were born before July 1, 1948 that distributions from individual retirement plans along with workplace retirement plans should be drawn from, no later than December 31. The Internal Revenue Service, urges retirees to be conscious of this.

 

Typically, required minimum distributions are made by the year’s end. However, there is an exception to those who turned 70.5 within 2018. This allows them to take their RMDs by April 1, 2019 instead. Therefore, those born between June 30, 1947, and July 1, 1948 fall under this new rule. This means waiting until April 1, 2019 to take that first RMD, it still goes toward the 2018 RMD, however it is still taxable in 2019.

Something to note, is that this rule only applies to the RMD for the first year. As for all other years, the same December 31 deadline applies. Therefore, if you are a taxpayer that turned 70.5 in 2017 and you already received the first RMD for 2017 on April 1, 2018, must receive a second RMD by Dec. 31, 2018.

Retirement plans that require RMDs

The RMD rules apply to those of traditional, Simplified Employee Pension along with Savings Incentive Match Plans for Employees, better known as SIMPLE, IRAs. Distributions are not required by Roth IRAs while the original owner is still alive. Participants with retirement plans, such as, 401(k), 403(b) and 457(b) plans, also require RMDs.

RMDs must be reported by an IRA trustee either to the IRA owner or they must offer to calculate it for the owner. Often, the trustee shows the RMD amount on Form 5498 in Box 12b. For a 2018 RMD, this amount is on the 2017 Form 5498 normally issued to the owner during January 2018.

RMDs must be reported by an IRA trustee either to the IRA owner or they must offer to calculate it for the owner. The RMD must be calculated separately depending on each IRA they own. However, the total amount can be withdrawn from one or more IRAs. The RMDs that are required from workplace retirement plans, however, must be taken separately from each of those plan accounts. This pertains to 401(k), 403(b) and 457(b) plans.

Helpful online forms and publications

For 2018, the RMD is based off of the taxpayer’s life expectancy on Dec. 31, 2018, along with their account balance on Dec. 31, 2017. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. In order to calculate this in the Appendices to Publication 590-B, the online worksheets on IRS.gov can be used, or you may find worksheets and life expectancy tables.

While the RMD rules are mandatory for all owners of traditional, SEP and SIMPLE IRAs and participants in workplace retirement plans, some people in workplace plans are able to wait until April as opposed to December to receive their RMDs. Understanding these deadlines is important, so you are prepared when it comes time.

To learn more about tax deadlines and other important IRS updates, visit: https://www.irs.gov/newsroom

 

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