1. What is a Required Minimum Distribution (RMD) and when must I take it?
Answer: A required minimum distribution is the minimum amount you must withdraw from your account each year. The IRS requires that you take a distribution from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account after the age of 72 (70 ½ if you reached 70 ½ before January 1, 2020) - due to changes made by the SECURE Act.
According to IRS.gov, RMD rules apply to the below retirement plans:
- Traditional IRAs
- SEP IRAs
- SIMPLE IRAs
- 401(k) Plans
- 403(b) Plans
- 457(b) Plans
- Profit Sharing Plans
- Other defined contribution plans
Note: There are no RMD requirements for a Roth IRA if you are the original account owner. However, if you have inherited a Roth IRA, you are subject to the RMD rules.
2. How do I calculate my Required Minimum Distribution (RMD)?
Answer: Your RMD is generally determined by dividing the adjusted market value of your IRAs as of Dec. 31 of the preceding year by the distribution period that corresponds with your age in the Uniform Lifetime Table. (Table III in IRS Publication 590-B, Distributions Individual Retirement Arrangements (IRAs)). Choice by KT recommends you speak with a tax advisor for questions that are more specific about distributions and RMD requirements. The RMD letter received is calculated based off of your accounts at Choice by KT and does not take into consideration other accounts held outside of Choice by KT.
3. Will my RMD calculation be impacted if I missed the deadline to submit my Fair Market Valuation (FMV)?
Answer: In the event that current values are not turned in to Choice by KT by the deadline, we will include the most recent values on the annual statement and any tax reports we send out at the end of January. We will update the values once they are received. However, if you do have tax reportable events and did not submit the FMV by the deadline, this might impact the courtesy RMD calculation that we send out. Please refer to your tax advisor with questions about values if you had any tax reportable events from your account this year.
4. How should I take my RMD if I have multiple accounts?
Answer: If you have more than one IRA, you must calculate the RMD for each IRA separately each year. However, you may aggregate your RMD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. You do not have to take a separate RMD for each IRA.
5. Can I withdraw more than the RMD amount?
Answer: Yes, an IRA owner can choose to withdraw more than the RMD amount. In addition, you cannot apply excess withdrawals toward future years' RMDs.
6. Can I take more than one withdrawal in a year to meet my RMD?
Answer: Yes, you may withdraw your annual RMD in any number of distributions throughout the year, as long as you withdraw the total annual minimum amount by December 31 (or April 1 if it is for your first RMD.)
7. Do I have to wait until the end of 2022 to take my RMD?
Answer: No, you are able to take your RMD at any time during 2022. We do ask that you complete your RMD for 2022 by November 1, 2022 for in-kind distributions and December 1, 2022 for cash distributions.
8. If I do not have cash in my account for my RMD, what can I do?
Answer: In this case, you would have the option to liquidate your asset(s) in your account to total your RMD amount. You would also have the option to take an in-kind distribution.
9. Can I take my precious metals as an in-kind distribution via my RMD?
Answer: Yes, you can take an in-kind distribution for the RMD. You would simply list the assets that you are taking on the distribution form.
10. Can I take the RMD amount from my LLC checking account?
Answer: No, the cash will need to be sent from the LLC checking account to the IRA account. Then, you must complete a distribution form so that the funds can be distributed to your personal account.
11. What are the penalties if I miss the RMD deadline?
Answer: It's very important to take your RMD before the deadline. If distributions are not taken on time or if the distribution amount does not equal the RMD amount, there may be a severe penalty of 50% of the amount not withdrawn on time. Reference "Consequence for failing to take required minimum distributions" section from the IRS website for additional information.
12. When will I receive my tax form regarding my RMD?
Answer: 1099s are mailed on January 31 of the following year. (Example: I took an RMD on February 1, 2022, so I will receive the 1099 in February of 2023.)
IRS.gov | Required Minimum Distribution Worksheets