Required Minimum Distributions

Reminder: For Clients Turning 70½ 

Are you required to take a required minimum distribution (RMD) by December 31? If you or a family member are age 70½ or older and are invested in an applicable IRA or retirement account, the answer is yes.1 Missing the deadline has consequences as you are subject to a 50% penalty tax on your withdrawal amount.

Generally, at age 70½, you must begin making annual withdrawals from most IRAs and employer-sponsored retirement plans, such as a 401(k).2 Applicable IRA types include traditional, Rollover, SEP, SARSEP and SIMPLE IRAs. If you have a Roth IRA, you do not need to take an RMD at any age.

Read on to learn about the IRS guidelines for these withdrawals.

How to Take Distributions

When to Take Distributions

Calculating Distributions

Keep Your Money Working for You

Distributions after Death

1 If you have recently reached age 70½, be sure to expand and read the "When to Take Distributions" section above.

2 If you are a 403(b), governmental 457(b) or a qualified plan participant who is not a 5% owner, your required beginning date is generally April 1 of the year you reach 70½ or after you retire, whichever is later. Check with your employer to determine when you are required to take a distribution from your plan.

IRS Circular 230 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties.

This information is for educational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation.