Article
Required minimum distributions: Frequently asked questions
Dec. 13, 2023 · Authored by Timothy Hole, CFP®, CIMA®
What is a required minimum distribution (RMD)?
The RMD is exactly as it sounds. For traditional Individual Retirement Accounts (IRAs), owners have the responsibility to make annual distributions from their retirement account, beginning at a certain age.
When do I take my RMD?
As of Jan. 1, 2023, your RMD age is dependent upon the year in which you were born. If you reached age 72 on or before Dec. 31, 2022, you were supposed to have been taking distributions and should begin taking them if not. If you were not age 72 by Dec. 31, 2022, you must take your first distribution by April 15 of the year following attainment of age 73.
In addition to the RMD age, distributions were also updated with the establishment of the ten-year rule. If a beneficiary is subject to the ten-year rule, they must empty the account by the tenth year following the year of the original owner’s (or eligible beneficiary’s) death. This rule initially caused confusion and required the IRS to issue Notice 2022-53, stating that the beneficiary of an IRA, who was subject to the ten-year rule but did not take an RMD in 2021 or 2022, will not be penalized. RMDs were waived in 2020 due to COVID-19. For those applicable individuals, RMDs must be taken in 2023.
What happens at death?
When the owner of an IRA passes away, there is typically a beneficiary assigned to the account, to whom the account now belongs to. Unless you are the spouse of the deceased, in which case you can rollover your spouse’s IRA into your own, the beneficiary will have an inherited IRA established in their name, e.g., John Smith inherited IRA beneficiary of Mary Smith.
The nature of your relationship with the deceased matters in terms of your distribution options and breaks down into two categories:
1. Eligible designated beneficiary
- Spouse
- Minor child of deceased
- Disabled or chronically ill individual
- Individual who is not more than ten years younger than the original IRA owner
2. Designated beneficiary
- Everyone else
