There’s a deadline coming up for retirees who turned 70½ during 2014. The IRS has issued a reminder for these taxpayers who own traditional IRAs, 401(k), 403(b), and 457 plans: they must start receiving required minimum distributions (RMDs) by Wednesday, April 1, 2015. This requirement doesn’t apply to Roth IRAs.
The April 1 deadline only applies to the required distribution for the first year. For the following years, the RMD must be made by Dec. 31. The RMD for the first year has to be figured using the life expectancy of the taxpayer’s birthday in 2014 and the account balance on Dec. 31, 2013. (The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5.)
Note that although the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans, such as those who are still working, can wait longer to receive their RMD.
The IRS is encouraging taxpayers to start planning now for any distributions required during 2015.
More information on RMDs can be found here, and a list of frequently asked questions is addressed here. If you have questions about your individual situation, feel free to give us a call at (864) 836-3136, and we’ll set up an appointment to talk.