When Do I reach Age 70 ½ for RMD Purposes?
Definition You reach age 70 1/2 ( 70.5) 6-months after the 70th anniversary of your date-of-birth. The significance of age 70 1/2 The significance of
March 22, 2021
Answer: Which of the 3 RMD Tables you should use depends on the scenario. The following is a high-level explanation of each table.
o You are married
o Your spouse is your sole primary beneficiary, and
o Your spouse is age 74 or younger
Bear in mind that your IRA custodian is required to send you an RMD statement by January 31 of the year for which you must take your RMD. The RMD statement must include your calculated RMD amount or an offer to calculate the amount upon request. Nevertheless, double-checking any RMD calculation provided by your custodian is recommended for the following reasons:
If you are eligible to use the joint life expectancy table, your IRA custodian is permitted to use the uniform lifetime table. Using the uniform lifetime table when you are eligible to use the joint life expectancy table, the calculation would result in a larger RMD than you are required to take. This is important for retirement account owners who want to take the lowest distribution amount possible.
If you have outstanding rollovers, outstanding transfers, and outstanding recharacterizations, those amounts must be added to your December 31 fair market value (FMV) when calculating your RMDs. Your custodian will not add these amounts, which will result in their calculated amount being lower than it should be. This could cause you to have an RMD shortfall, resulting in you owing the IRS a 50% excess accumulation penalty on the shortfall.
Outstanding amounts are assets that are not in the IRA as of the end of the year but legitimately credited to the IRA the following year. These are
If your distributions for the year are less than your RMD, you may work with your tax advisor to ask the IRS for a waiver of the 50% excess accumulation penalty. This waiver is requested on IRS Form 5329. The IRS will waive the penalty if the failure to meet the deadline is due to ‘reasonable cause’.
Definition You reach age 70 1/2 ( 70.5) 6-months after the 70th anniversary of your date-of-birth. The significance of age 70 1/2 The significance of
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