FAQ: Common Questions About IRA RMDs
1. What is the penalty for not taking an IRA RMD?
If you miss your RMD, the IRS may charge a 50% (Fifty) penalty on the amount not withdrawn.
2. Can I take my RMD from one IRA RMD account?
You can take the RMD from one account if you have multiple IRAs, but it must equal the total RMD from all accounts.
3. Do RMDs apply to Roth IRAs?
Roth IRAs do not require RMDs during the account holder’s lifetime.
4. Can I delay my RMD until age 75?
Under the new legislation, the RMD age is 73. You must start taking your RMD by the end of the year you turn 73.
5. Can I take more than my RMD?
Yes, you can withdraw more than the required amount, which may result in higher taxes.
6. What if I take too much from my IRA?
Taking too much will increase your taxable income, so sticking to the required minimum is essential unless you have a strategic reason to withdraw more.
7. How do I calculate my RMD?
Your RMD is calculated by dividing your IRA balance as of December 31 by the IRS life expectancy factor for your age.
8. What is a Qualified Charitable Distribution (QCD)?
A QCD allows individuals over 70½ to donate their RMD directly to a charity, lowering taxable income.
9. Can I take my RMD in instalments?
Yes, you can choose to take your RMD in monthly, quarterly, or annual instalments.
10. Do I have to take an RMD from my 401(k)?
Yes, RMDs are required from 401(k) accounts beginning at age 73 unless you are still utilized by the company supporting the arrangement.
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