April 1 Deadline for Certain Retirement Plan Distributions
Tuesday April 1 is the deadline for most taxpayers who turned 70 ½ during 2013 to begin receiving required minimum distributions (RMDs) from many qualified retirement accounts.
This deadline applies to traditional IRAs, and to most participants in 401(k), 403(b) and 457 plans. It does not apply to Roth IRAs.
Importantly, the April 1 deadline is effectively an automatic extension that the IRS gives to taxpayers for their first year (and only their first year) of RMDs. For subsequent years, the required minimum distributions must be made by Dec. 31. Attention to these deadlines is crucial because the IRS assesses stiff penalties for failure to take RMDs.
There are some exceptions to this April 1 deadline. Taxpayers who are still working may be able to wait until April 1 of the year after they retire to start receiving distributions, if their plan allows this, as well as some employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987. To be certain, check with your employer or provider.
The IRS urges taxpayers to plan now for any RMDs during 2014. An IRA trustee must either report the required minimum distribution amount to the IRA’s owner, or offer to calculate it for them.
For additional information on required minimum distributions or any other question regarding your estate planning, please contact Kevin D. Birkhead, Esq., at Timoney Knox LLP.