If the taxpayer turned 70 and half during the tax year of 2017, then he/she is eligible to start receiving the required minimum distributions (RMD) from Individual Retirement Accounts (IRA) and any workplace retirement plan by April 1, 2018.
April 1st is the deadline that applies to owners of IRAs, traditional, SEP and SIMPLE accounts, but not Roth IRAs. The workplace retirements plans included are 401(k), 403(b) and 457(b) plans. This April 1st deadline only applies to the first year of required distribution, for all following years the required minimum distributions deadline will be December 31st. That being said, all taxpayers who turned 70 and half in 2017 will receive the first required distribution on April 1st, and also will receive a second required distribution on December 31st.
In order to figure out the amount of required minimum distributions, all taxpayers 70 and half in 2017 must use their life expectancy as of their birthday in 2017, and the account balance as of December 31, 2016. Trustee must report the year-end value on the IRA account to the owner through Box 5 in Form 5498, IRA Contribution Information. All paper work to figure out amount based on life expectancy can be found in the appendices of Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).
Taxpayers may use Table III (Uniform Lifetime) to figure out their RMD. If eligible taxpayer reached both the ages of 70 and half and 71 years of age in 2017, then their distribution period would be of 26.5 years. There is a separate table, Table II, for an eligible taxpayer with a spouse who is 10 or more years younger and a beneficiary. Both tables can be found on the appendices of Publication 590-B.
April 1st is the mandatory deadline for owners of Traditional IRAs, and most of the owners of workplace retirement plans, others with workplace plans can wait a while to receive their RMD. This usually applies to employees who are still working, and if their workplace plan allows, can wait until April 1st of the year after their retirement to start receiving distributions. If taxpayer is an employee of the Public School system or certain tax-exempt organizations who have 403(b) plans before 1987 should check with employer, plan administrator/provider to see how to handle the plan.
It is encouraged to start planning for any required distributions a taxpayer may be eligible for in 2018. A trustee must report the amount of the RMD account to the taxpayer, or an offer must be made by the trustee to help calculate the RMD. The trustee should present the RMD amount on Form 5498, Box 12b, for the year of 2018, the amount can be found on Form 5498 issued in January 2018.
IRA owners may use an IRA qualified charitable distribution (QCD) account to pay a charity as part of their RMD obligation. This is only available to IRA owners 70 and half or older, the maximum annual exclusion for a QCD is $100,000.