Blog

Contact Us for More Information

Don’t Forget to Take Your 2016 RMD!

Posted by Jennifer V. Gateb | Dec 08, 2016 | 0 Comments

If you have savings in a tax-deferred retirement account such as a traditional IRA or 401(k), you are required to start taking Required Minimum Distributions (“RMD”) from these accounts after you turn 70 ½ years old. The exact amount of your annual RMD is calculated annually based on your age and the balance(s) of your account(s) at the end of the previous calendar year. The Internal Revenue Service provides two life expectancy tables for use in calculating your annual RMD — one for most retirees known as the "Uniform Lifetime Table" and another if the account's sole beneficiary is a spouse more than 10 years younger than the account owner.

Your first RMD must be taken by April 1 of the calendar year following the year in which you turn 70 ½. For example, if you turned 70 ½ at any time in 2016, your first RMD must be taken by April 1, 2017. Subsequent RMDs, however, must be taken by December 31 of each year. With 2016 coming to an end, eligible retirees should not forget to take their 2016 RMD by the end of the year. Failing to take your RMD by the applicable due date can result in severe IRS penalties, such as a 50% excise tax on the undistributed amount of your RMD for that year. For example, if you are required to take $50,000 from your IRA as your 2016 RMD but only take $20,000, you can be penalized on 50% of the difference ($30,000).

Eligible retirees should therefore know if and when they must receive an RMD, the date by which they must receive this distribution and exactly how much they need to take each year to avoid IRS penalties.

Contact Butterfield Schechter LLP if you have any questions about your RMD. Our experienced attorneys are more than happy to provide you with more details regarding your RMD, including the specific rules governing such distributions, common compliance issues and consequences, and various distribution options available to you and/or your beneficiaries.

About the Author

Jennifer V. Gateb

Jennifer V. Gateb practices in the areas of general tax and estate planning, ERISA (Employee Retirement Income Security Act of 1974) and related benefit matters.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

Retirement Plans

We help establish a customized plan that meets regulatory requirements as a tax qualified plan. Following implementation, our attorneys can assist clients and their plan administrator with regular reviews and updates to help with regulatory compliance for the plan's operation, and continued effectiveness in meeting the client's specific goals.

ESOPs

We are dedicated to employee ownership. When you come to us for ESOP services, you receive influential legal counsel who stand beside you to help you stay informed, in compliance, and abreast of the latest developments-all to help you realize your plan goals as fully and effectively as possible.

QDROs

A QDRO is a specially designed court order that is required for the division of retirement benefits in a family law case. Many family law attorneys do not possess the expertise necessary to divide retirement benefits or stock options upon divorce. We have extensive experience in dividing qualified plans, government plans, IRAs and stock options between the employee spouse and non-employee spouse.

Butterfield Schechter LLP provides the information in this website as a service to its clients and visitors to the site. This website is for information purposes only and is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The information in this website is provided "as is," and while the information in this website is updated periodically, additional facts or future developments may affect subjects contained herein, and no guarantee is given that the information provided is correct, complete, or up-to-date. Seek the advice of professional counsel before acting or relying upon any article, form, or information in this web site. To ensure compliance with the requirements imposed by the United States Treasury and the Internal Revenue Service, we inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of: (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing, or recommending to another person any transaction or matter addressed herein. Butterfield Schechter LLP has endeavored to comply with all known legal and ethical requirements in compiling this website. In the event that this communication does not conform with any laws or regulations of any state or country in which it may be received, Butterfield Schechter LLP will not accept legal representation based on this communication from a person in such a state or country. Electronic mail is provided as a convenience in communicating with the attorneys at Butterfield Schechter LLP. Contact by e-mail does not alone create an attorney-client relationship. Please remember Internet e-mail is not secure and messages sent to the firm or any of its employees or attorneys should not contain sensitive or confidential information. Thank you for visiting our site.

Menu