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Required Minimum Distributions

Retired? Then you probably already know about your required minimum distribution (RMD). Starting when you reach age 70½, you’re required to withdraw this amount from your IRA.

Did you know that if your RMD goes directly to your bank account, you will pay taxes on that money? For most retirees, the average tax rate is 22–24 percent. But, if you direct the money to a nonprofit organization, your withdrawal won’t be taxed.

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Questions

How much must I take out of my IRA at age 70½?

Required minimum distributions (RMDs) must be taken each year beginning with the year you turn age 70½. The RMD for each year is calculated by dividing the IRA account balance as of December 31 of the prior year by the applicable distribution period or life expectancy. This rule does not apply to your Roth IRAs. You can determine your distribution period or life expectancy by using the tables in Appendix B of Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

See the discussion of required minimum distributions and worksheets to calculate the required amount.

What is a qualified charitable distribution?

Generally, a qualified charitable distribution is an otherwise taxable distribution from an IRA (other than an ongoing SEP or SIMPLE IRA) owned by an individual who is age 70½ or over that is paid directly from the IRA to a qualified charity. See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) for additional information.

Can a qualified charitable distribution satisfy my required minimum distribution from an IRA?

Yes, your qualified charitable distributions can satisfy all or part the amount of your required minimum distribution from your IRA. For example, if your 2018 required minimum distribution was $10,000, and you made a $5,000 qualified charitable distribution for 2018, you would have had to withdraw another $5,000 to satisfy your 2018 required minimum distribution.

Want to learn more?

Read the official IRS information on RMD