A Guide to Calculating Required Minimum Distributions – Pierson Wealth Management & Investment

Calculating your Required Minimum Distribution (RMD) is a crucial aspect of retirement planning for individuals with tax-advantaged retirement accounts. Especially with recent changes under the SECURE Act, understanding when and how to calculate your RMDs is essential.
To calculate your RMD, follow these steps:
1. Determine Distribution Year: Generally, you can delay your first RMD until April 1 of the year following the year you reach age 72 (73 if you reach age 72 after Dec. 31, 2022); however, doing so will mean you need to take two distributions your first year.
2. Find the Retirement Plan Balance: Use your account balance as of December 31 of the prior year and add any outstanding rollovers.
3. Determine the Life Expectancy Factor: Refer to the Uniform Lifetime Table to determine this. If your spouse is the sole beneficiary and over ten years younger, use the Joint Life Expectancy Table.
4. Calculate Your RMD: Divide the retirement plan balance (step 2) by the life expectancy factor (step 3). The result is the RMD that must be taken by December 31 of the distribution year.
5. Consider Aggregation: RMDs from owned IRA and 403(b) accounts can be aggregated, However, other types of accounts cannot be aggregated.
Staying informed and following these steps ensures compliance with RMD requirements, avoiding penalties and managing your retirement account withdrawals effectively. For professional advice to tailor your RMD strategy to your unique financial situation, contact us today at (661) 297-7566 or visit www.PiersonWealthManagement.com.
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