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The Weekly Scenario: Required Minimum Distribution After 70 Years Old

Question: How do I calculate the required minimum distribution on my IRA once I have reached the age of 70 1/2?

Answer: I have broken this down into five steps:

First step – Determine the ‘distribution year’ which is typically the current year. If you are taking an RMD for 2015 in 2016, the distribution year is 2015.

Second Step – Determine the (IRA) account balance. The figure for calculating the RMD is based on the prior year end account balance. For example, for the 2016 distribution, the year-end balance is based on the value as of December 31, 2015 (plus or minus any adjustments such as conversions or recharacterizations).

Third Step – Determine the life expectancy factor. Look up the life expectancy factor on the appropriate table using the age of the account owner on the last day of the year.

Fourth Step – Use life expectancy factor. Take the prior year end balance and divide that by the life expectancy factor to get the RMD for the year.

Fifth Step – Take distribution from account. As soon as this amount is determined, the account owner needs to take this amount (but can take more) from the account as the minimum required distribution.



Steven E. Shane

Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.

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