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October 27, 2010

Taking Your First RMD – December 31 deadline for some

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Generally, your RMD must be taken by December 31 of the year for which it is due. However, an exception applies to your first RMD, which is due for the year in which you reach age 70½. Under this exception, your RMD for the year that you reach age 70 ½ can be deferred until April 1 of the following year. Caution: If you defer taking your RMD for the year you reach age  70½, until the following year (taking it by April 1), you will need to take two RMD amounts for that year. That is because the second and all subsequent RMDs must be taken by December 31 of the year for which they are due. Taking two RMD amounts in one year could impact your income taxes. Consult with your tax professional, who should be able to advise you on the tax impact of taking your first RMD in your 70½ year vs. deferring it until the next year.

Qualified plans, 403(b)s and governmental 457(b) plans

If you have funds in a qualified plan, 403(b) account or governmental 457(b) plan, and you are still employed by the plan sponsor (employer), you might be able to defer starting your RMD past age 70 ½ until after you retire. Check with your employer or plan administrator regarding your option for deferring your RMD.

Tip by Denise Appleby

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.

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