- You should take distributions by age 70.5. You should begin taking RMDs in the year in which you turn 70. If you don't take your first RMD during that year, you must take it no later than April 1 of the following year. And if you do put if off until April 1, you'll need to take two distributions in one year. So, for example, if you are 70.5 in May of 2005, you'll need to take your first RMD by Dec. 31, 2005. If you don't, you'll have to take it by April 1, 2006 and then, you'll have to take your second RMD by Dec. 31, 2006. If you don't take your RMDs on time, you may have to pay the IRS a 50 percent penalty tax on the taxable portion of your uncollected distribution. So, make sure you know your dates.
- You can take more than the minimum. You can withdraw more than the RMD, but, as the word "required" suggests, you can't withdraw less.
- You may be able to delay RMDs if you're still working. If your employer's retirement plan permits it, you may not have to take RMDs if you are still working and you are 70.5 or older. However, this exception won't apply if you own 5 percent or more of your company.
- Uniform Lifetime Table. Most people will use this table. Look up your age, find your life expectancy factor, take the balance of your retirement accounts as of Dec. 31 of the prior year and then divide by the factor. To illustrate: According to the Uniform Lifetime Table, the factor for age 70 is 27.4. So, for your first RMD, you take your retirement plan balance as of Dec. 31, 2004 (assuming you turn 70.5 in 2005) and divide by 27.4.
- Joint Life Table. You can use this table if you have a spouse who is the sole beneficiary and who is more than 10 years younger than you are. When you use this table, you take your retirement plan balance from the previous year and divide it by a joint life expectancy factor. Since this number will be higher than your individual life expectancy factor, your RMDs will be lower than if they were calculated on the Uniform Lifetime Table.