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  • Mary was born on March 1, 1940, and will be 70½ years old on September 1, 2010. She needs to take her first RMD by April 1, 2011. This is her RMD for 2010, so she needs to take her RMD for 2011 (her second RMD) by December 31, 2011.
    Ken's birthday is in January. He is calculating his RMD for his IRA for 2011, the year he will reach age 70 in January and age 70½ in July.

    His IRA balance at the end of 2010 (the year previous to the calculation year) was $100,000. He finds the factor for age 70—his age on his birthday in 2011 (the calculation year)—on the IRS Uniform Lifetime Table: 27.4.

    He divides $100,000 by 27.4 and gets $3,649.64 as the amount of his first RMD.
    Lynn has IRAs with three different investment management companies. She must calculate the RMD for each of the three IRAs, but she may withdraw the combined total from just one of the IRAs—or from two or all three. She may not, however, take the RMD for her IRA from a 403(b)account or vice versa since her 403(b) is a different account type.

    RMDs are more than an IRS requirement; they affect your overall financial plan. What are RMDs, and when do you have to withdraw them? What happens if you don’t take your RMDs? Read on to find out.

    Questions along the way? Call our retirement specialists at 888-421-0563 for help.

    Required minimum distributions (RMDs) are minimum amounts you must withdraw each year from most types of retirement accounts as mandated by the Internal Revenue Service (IRS).

    Once you reach age 70½, you must begin taking these withdrawals annually, though you can always withdraw more. The assets you withdraw generally qualify as income, and you must pay federal and sometimes state taxes on distributions (i.e., on the pretax contributions and earnings).

    IRAs and 403(b)s

    RMDs are required from each of the following account types:

    • IRAs (Traditional, Rollover, SEP, SAR-SEP, and SIMPLE)
    • 403(b)s

    RMDs are not required for owners of Roth IRAs, including surviving spouses who roll over their Inherited Roth IRA assets into a Roth IRA of their own.

    Other Employer Plans

    RMDs are also required from other types of employer-sponsored plans, which are not covered in-depth here. You should contact your plan sponsor directly for RMD information if you have an account in any of the following types of plans:

    • 401(k)
    • Profit sharing
    • Money purchase pension
    • Governmental section 457 deferred compensation
    IRAs (Traditional, Rollover, SEP, SAR-SEP, and SIMPLE)

    Typically, you must take your first RMD by April 1 of the year after the year you turn 70½—even if you have not yet retired. For each year thereafter, you must take an RMD by December 31.


    See an example


    403(b)s

    For 403(b) accounts, the rules are the same as with IRAs, with one exception. If you are still working at age 70½ and have a 403(b) with your current employer, you may be able to delay distributions from that account until April 1 of the year after you retire. RMDs for any other 403(b) accounts you have must begin by April 1 of the year after you turn 70½.

    Other Employer Plans

    If you have assets in an employer-sponsored retirement plan and are still working for that employer at age 70½, you may be able to delay distributions from those employer plan account(s) until April 1 of the year after you retire.

    It is important to know that RMDs are not optional. These withdrawals are required, even if you don't need the money.

    If you don't take your RMD or you take too little, an IRS penalty equal to 50% of the amount not distributed may apply.

    If you don't need the money now, learn more about your RMD Reinvestment Options, which include:

    • Investing in non-IRA/non-retirement accounts
    • Contributing to a donor-advised fund account
    • Contributing to a college savings plan
    Who Makes Sure I Get My RMD?

    If you have a money purchase pension, profit sharing, and/or other qualified employer retirement plan account(s), your employer is responsible for making sure required minimum distributions take place.

    However, you are still responsible for paying any penalties for missed or insufficient RMDs.

    If you believe you've missed any RMD deadlines or have taken less than the RMD amount in any year, please speak with a tax advisor.

    Your RMD is based on your current age and your year-end account balance for the prior year. Since both change every year, your RMD must be recalculated every year. There are three ways to estimate your RMD. (The exact distribution amount will be determined when you set up your RMD program.)

    1. Use our online RMD Calculator to estimate your distributions.

      You will need to obtain your IRA year-end balance(s) as of December 31 of the year prior to the calculation year. For example, if you are calculating your 2010 RMD, find your 2009 year-end balance.
    2. Contact a T. Rowe Price retirement specialist at 888-421-0563 who can assist you with the calculation.

      You will need to obtain your IRA year-end balance(s) as of December 31 of the year prior to the calculation year. For example, if you are calculating your 2010 RMD, find your 2009 year-end balance.
    3. Use either the IRS Uniform Lifetime Table or the Joint Life and Survivor Expectancy Table to estimate your distribution.

      You will need to obtain your IRA year-end balance(s) as of December 31 of the year prior to the calculation year. For example, if you are calculating your 2010 RMD, find your 2009 year-end balance.

      Divide your account balance on December 31 of the previous year by your age-based factor for the calculation year. To find your age-based factor, use one of the following two tables, according to your situation:


      • Joint Life and Survivor Expectancy Table
        Use this table only if your sole primary beneficiary on the account for the entire calculation year is your spouse and your spouse is more than 10 calendar years younger than you.

      See an example

    If you transferred or rolled over assets from your 403(b) to your T. Rowe Price IRA and the 403(b) assets are still in process on December 31, the assets are not actually in either account on that date. When you calculate your RMD, you must include these assets in your IRA balance (i.e., assume they have already been received) and not in your 403(b) balance.

    Note: If you have assets "in transit" between retirement accounts on December 31, you must include those assets in the receiving account balance.

    IRAs (Traditional, Rollover, SEP, SAR-SEP, and SIMPLE) and 403(b)s

    If you have multiple retirement accounts, you must calculate the appropriate RMD for each one. Once you determine your total RMD for an account type (i.e., IRA or 403(b)), you can take the combined amount from just one or more accounts of that type, if applicable, as long as you withdraw the total RMD amount each year.

    Note: IRAs and 403(b) accounts must be considered separately when determining your RMD total and making withdrawal decisions. If you have several IRAs, you may take your total IRA RMD from one IRA. If you have several 403(b)s, you may take your total 403(b) RMD from one 403(b) account. See the example below.


    Other Employer Plans

    RMDs from each employer-sponsored plan such as a 401(k) must be considered separately. Employer plans also cannot be aggregated with IRAs or 403(b) accounts for RMD purposes. You should contact your plan sponsor for details.

    If you have multiple accounts of the same type (IRAs, 403(b)s), be sure to include all assets in your computations to ensure you satisfy IRS RMD requirements.

    If you are a participant in a T. Rowe Price money purchase pension, profit sharing, 403(b), or individual 401(k) plan, we will be happy to provide the information you may require or help you with your RMD calculation. Talk with a retirement specialist at 888-421-0563.

    See an example

    You may always take more from your account (or accounts) than is required—the RMD is simply a minimum requirement. Keep in mind, however, that taking more than the required amount early in retirement can reduce the assets available to cover future living expenses. A T. Rowe Price retirement specialist can help you develop a plan.

    For qualified employer plans, the employer is responsible for determining the RMD amount and assuring that the RMD is distributed from the plan. For IRAs and 403(b) plans, the account owner is responsible for calculating and taking RMDs. Regardless of who is responsible for calculations, the taxpayer is responsible for any penalties.