Required Minimum Distributions and Age 70 1/2

Wednesday, May 05, 2010

By Beverly DeVeny, IRA Technical Expert
Follow Me on Twitter: @BevIRAEdSlott

Required minimum distributions (RMDs) begin in the year you turn 70 ½. Not age 70 and not age 71 but age 70 ½. So who is age 70 ½ in 2010? If you were born from July 1, 1939 up through June 30, 1940 you will be 70 ½ this year.

How do you know what age to use for calculating your RMD? After all, some people who are born in January won’t take their RMD until year end and some people who are born in December will take their RMD early in the year. The rule is that you use the age you will be at the end of the year (on December 31st, to be exact).

So, some of you folks who are turning age 70 ½ this year will be using age 70 to calculate your RMD and some of you will be using age 71.

If you are turning 70 ½ this year, you can put off taking your first RMD until April 1st next year. This only happens for the age 70 ½ RMD. But, if you wait until next year to take your RMD, you will have to take your 2011 RMD also by the end of the year so you end up with two RMDs for the year. For most individuals this does not make sense from a tax standpoint.

And finally, if you are doing a Roth conversion this year, the RMD must be taken before you do the conversion. The conversion is considered a distribution and RMD funds are considered to be the first funds distributed from the account. They cannot be moved into the Roth IRA.
 

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