Required Minimum Distributions: Did You Miss Your Required Beginning Date?

Last month, the IRS reminded taxpayers who turned 70-½ during 2015 that, in most cases, they need to start receiving a distribution from the IRAs and employer-sponsored retirement plans by April 1, 2016. This mandated distribution is referred to as a "required minimum distribution" or "RMD."

By way of background, employer-sponsored defined contribution retirement plans, IRAs and individual retirement annuities are subject to the RMD rules. Generally, RMDs must begin by the April 1 following the later of the calendar year in which the individual reaches age 70-½ or retires; however, the required beginning date for 5 percent owners from employer-sponsored retirement plans is April 1 following the year in which the individual reaches 70-½. Typically, the RMD for each year is determined by dividing the account balance as of the end of the prior year by a distribution period prescribed by uniform tables in IRS regulations.