What are Required Minimum Distributions and How are They Determined

November 20, 2014


What are Required Minimum Distributions and how are they determined? Beginning at age 70 1/2, you must begin to withdraw money from your retirement accounts every year. (This does not apply to Roth IRAs). The minimum amount is determined based on your life expectancy as contained in the IRS tables. Required Minimum Distributions are computed by dividing the account balance at year end by the life expectancy factor. Assuming a husband and wife are about the same age, then this factor at age 70 is 27.4 years.

Alternatively you could multiply your account balance by 3.65%, which is 100 divided by 27.4. The first Required Minimum Distribution must be withdrawn by April 1 of the year following the year that you turn 70 1/2. Subsequent Required Minimum Distributions must be withdrawn by December 31 each year.

Every year your Required Minimum Distribution will increase over your lifetime. If you want an estimate of your Required Minimum Distributions each year, let us do the math for you and help you develop a winning strategy.

Learn more about how you can benefit from Required Minimum Distributions by contacting Steve Ross at (866) 609-3232.