Both my husband and I turn 70 this year but only one of us has a required minimum distribution (RMD) from our retirement accounts. Here is why.
RMDs begin in the year you turn 70 ½, not 70. He turned 70 in January, so he turned 70 ½ in July. That means that he has an RMD for this year from his retirement accounts.
I turn 70 this month, August. I don’t turn 70 ½ until next year in February. My first RMD is not due until next year. Even though we both turn 70 this year, we are not both 70 ½ this year so only my husband has an RMD for this year.
To be more precise, the RMD is not actually due until April 1st of the year after you turn 70 ½ so he could delay his first RMD until next year and I could delay mine until the following year. But you have to be careful here; there is a potential tax trap if you delay your first RMD to the following year. Your second RMD will also be due by the end of that year. You will end up having to take two distributions in one year and paying the tax on both of them in that one year.
The RMD can be taken at any time during the year. You do not actually have to be 70 ½ when you take your first RMD. You can take a partial distribution of your first year RMD and delay taking the balance up to April 1st of the following year. Just remember to take your full year 2 RMD by the end of that year as well.
RMDs are always taxable for the year in which the funds leave the IRA. There is a penalty of 50% for any part of an RMD that is missed. IRS can waive this penalty for good cause.
If you have multiple IRA accounts you can calculate your RMD for each account and then add them together and take the total amount from any one or combination of accounts. However, you cannot aggregate your RMDs with those of your spouse. Each individual must take their own RMDs from their own accounts. You also cannot aggregate RMDs from accounts you own with accounts that you have inherited from someone else.
Your RMD amount must come out of the IRA before you do a Roth conversion, a 60-day rollover, or move funds out of an employer plan. The RMD cannot be redeposited into another retirement account, including a Roth IRA.