Common Questions About RMDs and IRAs

Some retirees and IRA holders who turned age 70½ in 2015 had to take required minimum distributions (RMDs) by April 1. Other retirees and IRA holders must take them by New Year’s Eve, as the IRS recently reminded. The Financial Industry Regulatory Authority (FINRA) has taken the opportunity to update its treatment of common questions concerning RMDs and IRAs.

FINRA reminds that the rules governing RMDs can be complex, and it argues that that is particularly true regarding beneficiary distributions and correcting miscalculations or missed RMD obligations. It provides answers to what it considers the most common questions concerning RMDs and IRAs, which include:

• What are required minimum distributions?

• How do I calculate the RMD?

• What if I don't take any distributions, or if the distributions I take do not meet the RMD amount?

• Can I withdraw more than the minimum required amount?

• If I do take more than the minimum amount, can a distribution in excess of the RMD for one year be applied to the RMD for a future year?

• Can I just take the RMD from one account instead of separately from each account?

• What happens if a retirement plan account owner or IRA owner dies before RMDs have begun?

• Do I have to take an RMD if I own an annuity?

• What reporting obligations does my brokerage firm have with respect to RMDs?

• What if a mistake is made?

FINRA also reminds that Roth IRAs do not require RMD withdrawals until after their owner dies. It adds that the IRS recommends that those who have a Roth account in an employer-sponsored plan contact the plan sponsor or plan administrator for RMD information.