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 ?
Lastly, a surviving spouse can defer the minimum required distributions until December 31 of the year in which the deceased spouse would have attained the age of 701/2.
However, several of our long-service professors have contacted us, inquiring about the possibility of amending our 401(a) plan to permit minimum required distributions (MRDs) from that plan while the professors are still employed.
In a basic example concerning retirement accounts, if a child's residuary trust is the designated beneficiary of a decedent's retirement plan, the child has the right to stretch the minimum required distributions from the IRA over his or her life expectancy.
The decedent was past the age of 70 A1/2 prior to his death, and had begun receiving minimum required distributions from the IRA.
Alternatively, a discretionary or "accumulation" trust also provides asset protection while also allowing the trustee discretion in making minimum required distributions.
Due to the state of the economy in 2009, the provisions mandating RMDs from traditional IRAs and pension plans were suspended; it is important to keep this in mind when considering the following example involving minimum required distributions and a recharacterization.
Not only must longevity be taken into consideration, but both minimum required distributions (MRDs) and unrequired distributions (monies needed to sustain your lifestyle) are important factors.
If funds are left to accumulate after age 70V, the 50 percent excise tax on undistributed minimum required distributions must be avoided.
If funds are left to accumulate after age 70 1/2, the 50% excise tax on undistributed minimum required distributions must be avoided.
By taking more than the minimum required distributions from an IRA, the beneficiary will be wasting the years of tax-free compounding that the IRA would generate.
Minimum required distributions ("MRDs") are not required for any retirement accounts for 2009 pursuant to a newly enacted law.
What's more, after age 70 1/2 you must take minimum required distributions (MRDs) from your IRA, even if you don't need the money.

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