Required Minimum Distribution for Your IRA

Physician's Money DigestJune 2007
Volume 14
Issue 6

In the calendar year in which you turn 70 1/2, you are required to begin taking the required minimum distribution (RMD) from your IRA. For your first distribution year, there is a 3-month grace period that ends on April 1 of the following year. So, by way of example, if Dr. Virginia Turner turns 70 1/2 in 2007, she would have to take her first RMD by April 1, 2008. For all subsequent years, the deadline is December 31. That means that she would have to take another distribution by the end of her second distribution year. In her case, this would be December 31, 2008. Keep in mind that, if Dr. Turner does the above and her two IRA distributions taken in 2008 are sizable, this could easily bump her into a much higher tax bracket, and in some cases, the highest tax bracket.

What You Need to Take

You may always take out more than the specified RMD amount, but never less. In any case, you generally may not take withdrawals prior to age 59 1/2 without incurring early withdrawal penalties and may begin withdrawing as much or as little as you like once you have reached age 59 1/2. However, in all cases, you must begin taking annual RMDs at age 70 1/2. Withdrawals, however, do not have to be taken monthly, all at the beginning of the year, or at the end of the year. You can take the withdrawals in any way and in any amount as long as you meet the required withdrawal amount.

So, how does Dr. Turner determine her RMD for 2007? She retired several years ago at age 64 and rolled what monies she had accumulated at that time from a 401(k) into a traditional IRA. Up until now she has not needed to withdraw. However, she will turn 701/2 on May 2, 2007, and will take her first RMD this year. On December 31, 2006, she had accumulated $1,875,530 in her IRA.

How to Calculate the Sum

To calculate the amount she is required to withdraw this year, she would divide the value of her IRAs as of December 31 of the previous year (December 31, 2006) by the life expectancy factor for her age.

This life expectancy factor may be found in the IRS's Publication 590. To obtain this document:


•Go to the "I need to?" box in the upper right-hand corner of your computer screen

•Toggle down to "Find forms and publications"

•Under the section "Download forms and publications by" click on "publication number"

•Then click the button labeled "Publication 590 Independent Retirement Arrangements (IRAs)"

•Download IRS Publication 590 in PDF format

Once you have a copy of Publication 590, go to page 102. Most people use Table III, the "Uniform Lifetime" table. However, if your spouse is more than 10 years younger than yourself, use IRS Table II, the "Joint Life and Last Survivor Expectancy" table, found on page 88 of the publication.

So, using the charts, Dr. Turner would divide her ending balance of $1,875,530 on December 31, 2006, by 27.4—the life expectancy factor in the Uniform Lifetime table for age 70. The result, $68,450, is the amount she would withdraw this year or the amount that she must withdraw before April 1, 2008.

Thomas R. Kosky and his partner, Harris L. Kerker, are principals of the Asset Planning, Group, Inc, in Miami, Florida. The company specializes in investment, retirement, and estate planning. Mr. Kosky also teaches corporate finance in the Saturday Executive and Health Care Executive MBA Programs at the University of Miami in Coral Gables, Fla. Mr. Kosky and Mr. Kerker welcome questions or comments at 800-953-5508, or e-mail Mr. Kosky directly at

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