Minimum required distribution


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Minimum Required Distribution

The amount that an IRA must begin to distribute to an annuitant by the age of 70.5 or the age of retirement, whichever is greater. The minimum required distribution may or may not be taxable, depending on the type of IRA. The amount of the minimum required distribution is determined by the value of the IRA, the length of time the annuitant has contributed, and the amount of contributions.

Minimum required distribution (MRD).

A minimum required distribution is the smallest amount you must take each year from your retirement savings plan once you've reached the mandatory withdrawal age.

There are MRDs for 401(k) plans, 403(b) plans, and traditional IRAs, and the maximum age you can reach before they start is usually 70 1/2. If you take less than the required minimum, you owe a 50% penalty on the amount you should have taken.

You calculate your MRD by dividing your account balance at the end of your plan's fiscal year -- often December 31 -- by a distribution period based on your life expectancy. If your spouse is your beneficiary and more than ten years younger than you are, you can use a longer distribution period than you can in all other circumstances.

References in periodicals archive ?
Assume that: 1) T elects a joint life payout based on his and W's lives; 2) T elects to recalculate his life expectancy, but not to recalculate the life expectancy of W; 3) T dies in the year 2015; 4) W elects to treat the account as her own following T's death; 5) W elects a joint life payout based on her and C's lives; 6) W elects to recalculate her life expectancy; 7) W dies in the year 2025 at which time estate taxes are paid; and 8) C, following the death of W, takes only the minimum required distributions from the retirement account.
Such a trust may be structured as a "conduit trust," which passes minimum required distributions to the beneficiary, or a purely discretionary "accumulation trust.
Minimum required distributions from a 401(k) generally follow the rules of traditional IRAs explained above.
Another technique to maximize the "stretch out" is having the IRA owner split each of his IRA accounts into separate accounts and use different joint lives in each to determine the minimum required distributions, subject to the MDIB requirement.
4] In this case, the minimum required distributions may be smaller.
In addition, the spouse will have until his or her RBD to identify a new designated beneficiary so minimum required distributions can be computed using the joint life expectancy of the spouse and the new beneficiary.
In addition, the legislation includes a cluster of reforms that are designed to help Americans preserve their savings further into retirement by extending to 75 the age at which individuals are required to take minimum required distributions.
The IRS has issued a 108-page proposal containing proposed regulations on retirement account minimum required distributions (MRDs), which apply to qualified plans, individual retirement plans, deferred compensation plans under Sec.
Although a special rule treats the DB as being no more than 10 years younger than the participant, regardless of actual age, when calculating the minimum required distributions (see proposed regulations section 1.
19, 2001, Treasury issued proposed regulations substantially simplifying and reducing the minimum required distributions (MRDs) from most retirement plans.
The software also automatically factors in minimum required distributions in calculating the after-tax income.
Minimum required distributions (MRDs) from IRAs cannot be converted, as Sec.

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