How many RMDs do I take, and when?

Ask NJMoneyHelp

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Q. I understand Required Minimum Distributions (RMDs) must be taken by the time a person reaches 70 1/2 years old or there is a hefty penalty. The RMD is based on the value of your account as of Dec. 31 of the previous calendar year. I’ve also heard I can delay a withdrawal in the first year. If I turned 70 in January 2018, what RMD must I take, and what date is it based on?
— Investor

A. Taking your first RMD can be confusing.

For starters, delaying the distribution of the first year’s RMD until April 1 of the year following the year you turn 70 1/2 does not change the calculation of the first year’s distribution, said Howard Hook, a certified financial planner and certified public accountant with EKS Associates in Princeton.

It is merely the date by which the calculated amount must be withdrawn.

As an example, Hook said, if you turn 70 1/2 in 2018 and calculate your RMD to be $10,000, this is the amount that must be withdrawn by April 1 of 2019.

Hook said you do not need to take two withdrawals as long as you take one withdrawal that’s large enough to cover both the 2018 RMD and 2019 RMD by April 1, 2019.

If you do not want to take both the 2018 and 2019 RMD at the same time, then you would be required to take the 2019 RMD by Dec. 31, 2019.

And, he said, you can take your 2018 RMD in October or November of 2018, which may be more preferably from a tax perspective than waiting until 2019.

“As a point of reference, the requirement for when you need to take the first year’s RMD is in the year you turn 70 1/2 – not once you turn 70 1/2,” he said. “So someone who turns 70 1/2 on Dec. 30, 2018 can take the RMD as early as Jan. 1, 2018 and as late as April 1, 2019.”

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