Nixon Peabody LLP

  • People
  • Capabilities
  • Insights
  • About

Trending Topics

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni

    Practices

    View All

    • Affordable Housing
    • Community Development Finance
    • Corporate & Finance
    • Cybersecurity & Privacy
    • Environmental
    • Franchising & Distribution
    • Government Investigations & White Collar Defense
    • Healthcare
    • Intellectual Property
    • International Services
    • Labor & Employment
    • Litigation
    • Private Wealth & Advisory
    • Project Finance
    • Public Finance
    • Real Estate
    • Regulatory & Government Relations

    Industries

    View All

    • Cannabis
    • Consumer
    • Energy
    • Entertainment
    • Financial Services
    • Healthcare
    • Higher Education
    • Infrastructure
    • Manufacturing
    • Non Profit
    • Real Estate
    • Technology

    Value-Added Services

    View All

    • Alternative Fee Arrangements

      Developing innovative pricing structures and alternative fee agreement models that deliver additional value for our clients.

    • Continuing Education

      Advancing professional knowledge and offering credits for attorneys, staff and other professionals.

    • Crisis Advisory

      Helping clients respond correctly when a crisis occurs.

    • DEI Strategic Services

      Providing our clients with legal, strategic, and practical advice to make transformational changes in their organizations.

    • eDiscovery

      Leveraging law and technology to deliver sound solutions.

    • Global Services

      Delivering seamless service through partnerships across the globe.

    • Innovation

      Leveraging leading-edge technology to guide change and create seamless, collaborative experiences for clients and attorneys.

    • IPED

      Industry-leading conferences focused on affordable housing, tax credits, and more.

    • Legal Project Management

      Providing actionable information to support strategic decision-making.

    • Legally Green

      Teaming with clients to advance sustainable projects, mitigate the effects of climate change, and protect our planet.

    • Nixon Peabody Trust Company

      Offering a range of investment management and fiduciary services.

    • NP Capital Connector

      Bringing together companies and investors for tomorrow’s new deals.

    • NP Second Opinion

      Offering fresh insights on cases that are delayed, over budget, or off-target from the desired resolution.

    • NP Trial

      Courtroom-ready lawyers who can resolve disputes early on clients’ terms or prevail at trial before a judge or jury.

    • Social Impact

      Creating positive impact in our communities through increasing equity, access, and opportunity.

    1. Home
    2. Insights
    3. Articles
    4. Quick Lesson about Required Minimum DistributionsArticles

    Article

    Quick Lesson about Required Minimum Distributions

    Dec 27, 2019

    Share

    By Mary-Benham Nygren

    What you need to know about taking Required Minimum Distributions from retirement accounts.

    Your retirement accounts cannot just sit there indefinitely. You must withdraw a required minimum distribution (RMD) from your retirement account(s) each year, and Uncle Sam wants the tax dollars that are generated from taking these distributions. (Of course, you can take out more if you wish.)

    When must someone begin taking distributions?

    Individuals must begin taking distributions:

    • From an individual retirement account (IRA), which includes traditional IRAs, Simplified Employee Pension (SEP) IRAs or Savings Incentive Match Plan for Employees (SIMPLE) IRAs, when the individual reaches age 72 (or for persons who reached 70 ½ before December 31, 2019, 70½).
    • From qualified employer retirement plans, which include 401k plans, 403b plans or defined contribution plans, when the individual reaches age 72 (or for persons who reached 70 ½ before December 31, 2019, 70½) or if later, the year of the individual’s retirement.
      • Exceptions apply to more than 5% owners of the business.

    When do distributions have to take place?

    Distributions from retirement plans are required as follows:

    • The first distribution from an IRA must take place by April 1 following the year you reach 72 (or for persons who reached 70 ½ before December 31, 2019, 70½).
    • The first distribution from an employer plan must take place by April 1 following the year you reach 72 (or for persons who reached 70 ½ before December 31, 2019, 70½) or if later, the year the individual retires.
    • Subsequent distributions must take place by December 31 of each year. If you wait until April 1 following the year you turn 72 (or for persons who reached 70 ½ before December 31, 2019, 70½) to take first distribution, then you will have to take your current year (i.e., second) distribution by December 31 of the same year.

    How are the amounts calculated?

    The RMD is determined for each taxpayer individually by:

    • Determining the fair market value of all retirement accounts as of December 31 of the preceding year.
    • Finding the factor corresponding to your age in the current year using the Uniform Lifetime Table.
    • Dividing the total fair market value for all retirement accounts by the factor.

    How can distributions be taken?

    The RMD for a given type of retirement account can be:

    • Distributed from one or multiple accounts. An RMD for a qualified retirement plan must be calculated separately for each such plan and the distribution must be withdrawn from such plan.
    • Multiple distributions occurring throughout the year, as long as the full RMD is distributed by December 31.
    Trusts And EstatesIncome TaxPersonal

    Practices

    Private Wealth & Advisory

    Subscribe to stay informed of the latest legal news, alerts, and business trends.Subscribe

    • People
    • Capabilities
    • Insights
    • About
    • Locations
    • Events
    • Careers
    • Alumni
    • © 2023 Nixon Peabody. All rights reserved
    • Privacy Policy
    • Terms of Use
    • Statement of Client Rights
    • Supplier Diversity Program
    • Nixon Peabody International LLC
    • PAL