I'm maddeningly unable to determine what age to use, among the two ages everybody takes on in a single year, when using table III to figure minimum distribution from an IRA.
Assume I take the age 70 1/2 distribution in the 70 1/2 year.
It looks from the examples like the "age" is just a year difference between the distribution year and the birth year, in which case your first distribution would use age 71 even if (at the time of distribution) you're age 70. Is this right?
The RMD is based on your age on Dec 31st of the prior year. So, whatever Age you were on 12/31/10, and whatever balances you had in the IRAs on that same date are all you need to calculate your RMD.
Your question can't be answered without the actual birth date. In the year you turn age 70 1/2, you can be either age 70 or age 71 on the last day of the year. The RMD is determined by your age on the last day of the year of the actual distribution.
Example 1: Born in Oct. 1940. You turn age 70 1/2 in 2011. You also turn age 71 in 2011. You use age 71 from the life expectancy table.
Example 2: Born in Feb. 1941. You turn age 70 1/2 in 2011. You will only be age 70 in 2011. You use age 70 from the life expectancy table
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See my reply. Your life expectancy is based on your age attained by
12/31 in the year of distribution using the account balance at 12/31 from the prior year.
Right you are Alan, I have an RMD notice from Schwab in front of me, balance from 12/31/10, age as of 12/31/11, this year. I sit, corrected. Thank-you.
It is my understanding that RMDs are required to be taken annually starting with the year in which the taxpayer turns 70, except that the first distribution can be deferred to the year in which the tax payer turns 70 1/2. Thus, in Example 1, it would also be necessary to take a *second* RMD in 2011 because 2011 is also the year in which the tax payer turns 71, and presumably the amount of the second RMD would be the same as the first RMD, that is, determined from the account balance on 12/31/2010 and a life expectancy of 71? The third RMD would need to be taken in 2012 using the account balance on 12/31/2011 and a life expectancy of 72 and so on. Or is my understanding incorrect and *all* RMDs can be deferred to the year in which the taxpayer turns age (n + 1/2) so that there is only one RMD for each year? I am aware that the taxpayer is entitled to take a distribution that exceeds the RMD, which will reduce the account balance and hence the RMD in future years.
Dilip Sarwate
You are required to take your firstt RMD in the year you turn age 70
1/2. However, the law allows you to defer taking it until no later than 4/1 of the year after the year you turn age 70 1/2. If you elect to defer that first RMD into the next year, then you will be required to take two distributions in the next year: Your first RMD deferred from the year before and your second RMD. Only the first RMD for the year you turn age 70 1/2 may be deferred to the next year. All subsequent RMDs must be taken no later than 12/31.
One doesn't need an exact date: January-June or July-December is sufficient (assuming a calendar year taxpayer).
You misunderstand. The first RMD is FOR the year in which you turn 70
1/2. For only the first RMD you may wait until April 1 of the following year to take it. That's called the required start date. See IRS Publication 590.Phil Marti VITA/TCE Volunteer Clarksburg, MD
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