IRS: Don't Forget the Required Minimum Distributions Deadline

While most Americans have their eyes firmly on the Christmas holidays, many US retirees have another milestone to consider.

While the holidays are the emotional favorite, they shouldn’t let the deadline slip by to make Required Minimum Distributions (RMDs) from their retirement plans and individual retirement accounts. That deadline is December 31.

RMDs are generally the minimum amounts that plan owners have to take out in a year, starting in the year they reach 72. Owners have the alternative to start RMDs the year they retire, if that’s later than 72.

If the retirement plan account is an IRA – or the account owner is at least a 5% owner of the business that sponsors the retirement plan – the account owner has only one choice: to withdraw the RMD starting the year they turn 72.

Taxpayers who reached 70 1/2 in 2019 – that is, those who tuned 70 on or before June 30, 2019 – didn’t have to take a Required Minimum Distribution for 2020, but they will have to take one for 2021. (More on this later.)

Those who reach 72 this year with their 70th birthday on or after July 1, 2019, have their first RMD due by April 1 of 2022.

Who has to take an RMD?

The rules for Required Minimum Distributions apply to:

  • Owners of traditional Individual Retirement Arrangements (IRAs)
  • Owners of traditional Simplified Employee Pension (SEP) IRAs
  • Owners of Savings Incentive Match Plans for Employees (SIMPLE) IRAs
  • Participants in various workplace retirement plans, including 401(k), Roth 401(k), 403(b) and 457(b) plans

The biggest excepted group to RMDs are taxpayers who participate in Roth IRAs, since those investments don’t require distributions while the original owner is still alive.

How do retirees find their RMD?

An IRA trustee or the plan administrator will notify the taxpayer who owns the account that an RMD must be taken, when, and how much to withdraw. This is done for each IRA the taxpayer owns. In the case of IRAs, the taxpayer with multiple accounts can take the RMD amounts for all their accounts from just one, satisfying the law for distributions.

Rules, however, are different for workplace retirement plans, where RMDs have to be taken from each account the taxpayer owns.

The penalty for not taking the distribution – or for not taking enough in a distribution – can be a real attention-getter: a 50% excise tax on the amount not distributed.

The RMD is figured using the taxpayer’s life expectancy and the account’s balance. Many trustees use Form 5498, IRA Contribution Information, to report the distribution to the account owner.

Most times, life expectancy is calculated using the Uniform Lifetime Table III in Publication 590-B, Distributions from IRAs.

The IRS also has online worksheets taxpayers can use at

The coronavirus and 2020 distributions

Like just about everything else in American life, the COVID pandemic affected Required Minimum Distributions in 2020.

If an IRA owner or a beneficiary got an RMD during 2020, they had the option of returning the funds to their IRA or other qualified plan to avoid paying taxes on the distribution.

If a 2020 distribution could be qualified as a coronavirus-related distribution, it could be repaid over a three-year period or have taxes on the RMD spread over three years.

A 2020 distribution from an inherited IRA, however, faced a different set of rules, since those withdrawals weren’t allowed to be repaid. Taxpayers could, however, have the taxes on the RMD spread over a three-year period.

For frequently asked questions, forms, instructions and other tools, visit online.

There, find:


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