Home / Insights / Turning 70½ in 2018? What You Need to Know about RMDs

Turning 70½ in 2018? What You Need to Know about RMDs

by | Dec 28, 2017 | Estate Planning & Preservation

Are you one of the millions of Americans with an IRA or 401k who have recently turned 70 or will reach that age in 2018? There are a few rules you need to know to avoid heavy penalties by the IRS for failure to take the proper required minimum distribution, commonly known as the “RMD”.

When to Take the RMD

  • If you turn 70 between July 1, 2017, and June 30, 2018, you should take the RMD by December 31, 2018.
  • While the IRS allows you to extend your first RMD until April 1, 2019, this would result in you having to take two RMDs in 2019, so it is not recommended.

How Much to Withdraw from Your Traditional IRA

  • Add together the 2017 year-end balance of every traditional IRA you own. (Roth IRAs are not subject to RMD rules.)
  • Divide the total amount by the factor provided by IRS based on your age and life expectancy. You can use the IRA RMD Worksheet provided by the IRS. For example:

Total IRA balance on 12/31/2017                              $ 400,000.00
Divided by Distribution Period set by IRS                               27.4
Total Required Minimum Distribution                        $   14,598.54

  • If your spouse is more than 10 years younger than you and is the sole beneficiary of the IRA account, use this IRS worksheet instead of the worksheet link above.
  • You can withdraw the funds from one IRA account or allocate the withdrawal over multiple accounts.
  • You can withdraw more than the RMD if needed.

How Much to Withdraw from Your Traditional 401(k)

  • Calculate RMD for each 401(k) account separately using the same worksheets shared above for IRAs.
  • RMD for each account must be withdrawn from that same account.
  • If you’re still working, your first RMD can be delayed until the year you stop working (unless you are a more than 5% owner of the business).

Miscellaneous Rules

  • Distributions do not have to be in cash; you can transfer value equal to the RMD in stock or mutual funds from your IRA(s) to a taxable brokerage account.
  • You cannot roll-over RMD into another IRA.
  • Any RMD must be taken before converting a traditional IRA to a Roth IRA.

Withholding Taxes

  • An IRA custodian will generally withhold 10% of your payout to be sent to the IRS.
  • You can ask the custodian to withhold more or less (or not to withhold at all).


  • Penalty for failure to withdraw is equal to 50% of the amount you should have withdrawn.
  • A penalty waiver can be requested if you have a good excuse, such as illness. The IRS will review prior to making you pay the penalty.

Donations to Charity

  • If over 70½, a donation of up to $100,000 from your IRA can count as your RMD to avoid the distribution becoming taxable income.
  • With fewer and fewer individuals benefitting from itemizing starting in 2018, this is a good way to save taxes on your charitable donations.
  • This may also help you get other benefits from income reduction, such as a lower Medicare premium.

Do you have additional questions on the above information or any other aspect of your wealth planning? Please call us at (904) 807-2183 to arrange a conference with a board-certified tax attorney.

Read the rest of our blog series about Required Minimum Distributions:
Part 2 – How Qualified Charitable Distributions Can Minimize the Tax Impact of RMDs
Part 3 – RMDs and the Death of IRA Owner


Get in Touch with Us

This field is for validation purposes and should be left unchanged.


Marks Gray P.A.

Connect with Us