Do you have a qualified (tax-deferred) retirement account? 401(k)s and traditional IRAs are a few examples that many Americans have; but, did you know once you turn 70 ½ you’ll be required to take a distribution from those accounts each year? To take the distributions, also known as Required Minimum Distributions or RMDs, you’ll receive a specific calculated amount from your custodian (the company that holds your account). These must be taken yearly otherwise you’ll be subjected to a 50% penalty fee on the amount you were supposed to take plus appropriate taxes. This law was signed in by Ronald Regan in 1986 and applies to anyone with a retirement account created after 1987.


Why are you forced to take distributions even if you don’t want to or need them? It’s simple—the IRS wants their share. In theory, you could never take any money from your qualified retirement account and leave it to your beneficiaries. However, since these accounts are tax-deferred, the owner will never pay taxes on the account unless a distribution is taken. Of course, the IRS does not like this so, RMDs were born.

How to Take RMDs

Typically, you’ll need to take your RMD by December 31st of the year it’s due. However, your first RMD can be deferred until April 1st of the next year. This can be useful or harmful depending on your tax situation because you could end up paying double taxes in one year if you decide to defer.

Once you turn 70 ½ you might want to calculate your RMD. We do recommend waiting for the custodian to send your amount, but you can get an estimate by dividing your end of year account balance(s) by your distribution period from the Uniform Lifetime Table below. For example, if your end of year account value is $500,000 and you are 76 years old, your RMD should be about $22,727.27.

As you age, your distribution amount will go down. However, your beneficiaries will need to take RMDs on your account once you pass. The criteria will be slightly different for them.


Giving the IRS more money can be annoying, to say the least. Instead of giving your taxable portion to the IRS, you can give part or the full amount of your RMD to charity. However, this must be done directly and not taken out by the owner and then given to a charity—otherwise, it will be taxed. This would be called a qualified charitable distribution.

If you are still working and contributing to a qualified retirement savings account at 70 ½, you may be able to delay your RMD. Each company and plan have a different set of rules, so you’ll have to check your plan to see if you qualify.

Minimizing RMDs

RMDs may seem like an inescapable headache, but we have solutions. Minizing RMDs is a specialty at RGA. We have several options to assist in minimizing needless taxes on your hard-earned savings. We believe retirement should be stress-free and about doing all the things you’ve wanted to. Travel, classes, and new activities may come to mind. Are you thinking the hassle of RMDs will hinder your big plans? Fear not—we constantly help our clients with their RMD problem, so they can enjoy their money and their retirement.  If you want to avoid unnecessary taxes and distributions, give us a call at 1.800.467.8152 or email us at so we can discuss the best way to avoid RMDs based on your plans.