Plan Ahead for Your 2012 Required Minimum Distribution

Written by: Mark Cussen

Owners of traditional IRAs must begin taking required minimum distributions (RMDs) from their IRAs by April 1st of the year after they reach age 70 ½.  Although virtually all IRA custodians will calculate the required minimum distribution and send this information to the owner automatically, you can estimate your RMD today to begin planning for 2012.  Your RMD will change every year based on your age and your aggregate IRA balance at the end of the year.

To find out what your RMD is for this year, simply perform the following steps:

  1. Look at your IRA account history and determine the exact balance at the end of last year.  You will need to do this for every IRA you own, regardless of the type of custodian that holds it, such as a bank, brokerage firm or insurance company.  Exclude any balances in ROTH IRAs.
  2. Add in any amount that was rolled over into an IRA after the end of the year.
  3. Disregard any non-RMD distribution taken between the end of last year and today; it will be factored into next year’s distribution.
  4. Download IRS Pub. 590 from the IRS website at and find Appendix C.
  5. Use Appendix C to find the life expectancy number that correlates with your age. There are three tables in Appendix C for different types of taxpayers:
  • Table I is based on single life expectancy for beneficiaries.
  • Table II is based on joint and last survivor life expectancy for IRA owners whose spouses are more than 10 years younger than them.
  • Table III is for single taxpayers, married taxpayers whose spouses are less than 10 years younger than them and married taxpayers whose spouses are not the only beneficiaries of the IRA.
  1. Divide the year-end balance of your IRA by the appropriate life expectancy number in the table.  The resulting number is the amount that you must withdraw from your IRA this year.  The withdrawal can be made in a single lump sum or a series of payments at your choosing.
  2. Repeat this process for every IRA that you own excluding balances in any ROTH IRAs.  If you have several different accounts, then you are allowed to take the aggregate required minimum distributions from all the accounts out of just one of your IRAs.  You can also add up all of your IRA balances as of the end of the year and do a single calculation based upon their total.
  3. Use the special rules for Individual Retirement Annuity RMD calculations that are listed under IRC section 1.401(a)(9)-6. IRS Pub. 575 has additional information on annuity distributions.


Jim was born on October 4, 1935. He turned 70 ½ in 2006 and had to take his first RMD in April of 2007.  On December 31, 2010 Jim had an IRA balance of $68,400.  In 2011, he is 76 years old and Table III says that his life expectancy number is 22.0.  Jim’s RMD is $64,800 /22.0 or  $2,945.45.  Jim must withdraw $2,945.45 from his IRA in 2011 or be subject to penalties.  He can take a single payment of $2,945.45 or 12 monthly payments of $245.45

RMD calculations are easy for once you know which life expectancy table to use.  For more information on calculating required minimum distributions, download Pub. 590 from the IRS website at or consult your financial advisor.


Plan Ahead for Your 2012 Required Minimum...

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