December 31: the deadline to donate or distribute

November 7, 2016


As an IRA owner, you've probably heard about required minimum distributions (RMDs). These account withdrawals, which are mandatory once you reach age 70½, are coupled with a steep penalty for noncompliance, and you're generally required to take them from your account by December 31.

Here are three facts about RMDs.

* The amount of your RMD is computed using tables issued by the IRS. These tables provide percentages that are applied to the value of your retirement account as of December 31 of the year preceding the distribution. Generally, distributions from traditional IRAs are taxable, and you may want to make estimated tax payments or have federal income tax withheld from your RMD.

* Instead of taking a taxable distribution, you can make a contribution of up to $100,000 directly from your IRA to a charity. The contribution counts as an RMD, and is excluded from your income. While you can't take a charitable contribution deduction for the donation, you may benefit from other tax breaks, such as a reduction in your adjusted gross income, which can affect the taxability of social security benefits.

* If you inherited an IRA – including a Roth IRA – from someone other than your spouse, you may need to take an RMD from that account.

Contact us for assistance with the timing and calculation of your retirement account distributions.

Keywords: ira, retirement, rmd
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