These rules might create a bit of a tax snarl as well as other headaches if they catch you off guard, so it’s best to be prepared. You can project your future distributions so you’ll know about how much you’ll have to withdraw each year and plan your retirement accordingly. RMD calculations vary, depending on whether you’re taking a current-year required distribution or a beneficiary distribution, so you should choose an RMD calculator based on what you want to estimate. The calculator will project your RMDs for all future years when you enter your estimated rate of return. This can be very useful when you’re tax planning for retirement, because larger distributions that come later on might push you into a higher tax bracket. Keep in mind that it sometimes doesn’t make sense to wait until age 72 to withdraw from your retirement accounts. If your required distributions will be larger, later on, consider a plan where you can withdraw from these accounts at a younger age. You’ll need last year’s year-end account balance on hand, because the formula that determines how much you must withdraw is based on it. It also takes into consideration your year-end age in the year of distribution. If you have multiple IRAs held in different institutions, you can add up the total retirement account balances and take your RMD from just one qualified account. If you have non IRA retirement accounts, then RMDs related to those accounts will need to be taken independent of the total IRA balances. You might want to consider consolidating your accounts to make this process a bit easier each year. The rules are slightly different from those for your own account. You’ll need the deceased person’s age of death as well as the prior year-end account balance. The SECURE Act requires that the entire balance of a plan participant’s account be distributed within ten years. There is an exception for a surviving spouse, a child who has not reached the age of majority, a disabled or chronically ill person, or a person not more than ten years younger than the employee or IRA account owner. The new 10-year rule applies regardless of whether the participant dies before, on, or after, the required beginning date, now age 72. These RMD rules can be a pain, but they allow you to stretch out inherited accounts and take distributions slowly over your entire life expectancy, which can be a powerful benefit.
