The Financial Industry Regulatory Authority issued an investor alert to help individuals understand the required minimum distributions (or RMDs) that you must withdraw from your traditional IRA to avoid being penalized on your taxes. The rules concerning RMDs can be quite complex, but there are some matters that can be simplified by the FINRA Investor Alert.
Under federal law, investors are required to start taking minimum annual withdrawals from their IRAs after they reach 70 ½ years of age. The first RMD must be taken = by April 1 of the following calendar year after they reach this age. Subsequent withdrawals must be completed before December 31 of each year.
There are various calculations to determine an individual’s RMD, and if the RMD is not withdrawn in time, there may be tax penalties.
The FINRA Investor Alert answers 10 of the most commonly asked questions concerning RMDs. It is designed to give readers a better idea of what is required of them and how they know if they are supposed to withdraw the RMD from their traditional IRA. It is important to discuss this situation with a professional if you are unsure of whether you have to take out an RMD or how much you have to withdraw.