Tax information

After reaching age 73, the deadline for taking a required minimum distribution (RMD) is December 31 each year. However, if this is your first RMD you have the option to delay it until April 1 of the year following the year you reach age 73.

When taking a required minimum distribution (RMD), the money is taxed as ordinary income and as a result it may be subject to both federal and state taxes.

Unless you advise us otherwise, when you take a required minimum distribution (RMD) we'll withhold 10% of your withdrawal amount for federal taxes. You can choose to have us withhold more, or you can opt for no withholding and reconcile the tax amount you may owe when you file your tax returns.

The state taxes for required minimum distributions (RMDs) are based on state income tax rates and rules that vary state to state.

After reaching age 73, required minimum distributions (RMDs) must be taken from these types of tax-deferred retirement accounts:

• Traditional, rollover, SIMPLE, and SEP IRAs
• Most 401(k) and 403(b) plans
• Most small-business accounts [self-employed 401(k), profit sharing plan, money purchase plan]

If a required minimum distribution (RMD) is not taken by the annual deadline, it could result in an IRS penalty equal to 25% of the amount not taken on time.

Yes, even if you continue working past age 72,* you have to take an RMD from your IRA.

However, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small-business account, if:

• You're still working
• You do NOT own more than 5% of the business you work for
• You have an employer-sponsored retirement account with the business you work for

If you meet all the criteria above, you may delay taking an RMD from the account until April 1 of the year after you retire. Keep in mind that this does not apply to IRAs or other accounts you may hold with companies you no longer work for.

If you are looking for ways to lower your taxable income, you may want to consider donating your required minimum distribution (RMD) to charity. A qualified charitable distribution (QCD) is a direct transfer of money from your IRA that's payable to an eligible 501(c)(3) charitable organization, which can also satisfy your RMD.