From
Your Perspective:
Managing your retirement nest egg
Minimum required
distributions
If you handle your
minimum
required distributions, you can withdraw on any schedule you wish
as long as you take the full amount within the calendar
year. Here’s
how it works:
1.
You get an end-of-year statement from your account trustee, reporting the value of your account as of the last day — usually but not always December 31. The same information is reported to the IRS.
2.
Using IRS Publication 590, you look up what’s known as the uniform withdrawal factor, which is based on your current age.
3.
You divide your end-of-year balance
by the uniform withdrawal factor to determine the
amount you must withdraw before the end of the year.
For example, if you’re 70, you divide your
account balance by 27.4, and if you’re 71,
you divide by 26.5.
4.
The next year, you do a new calculation
based on your new account value and your new uniform
withdrawal factor. That routine continues each year
until either you die or your account is fully depleted.
You can wait until April 15 of the year following the year you turn 70 1/2 to take your first required distribution. But you may not want to. That’s because the first distribution is actually for the year you’re 70, and you also have to take out money for the year you’re 71. Waiting until April to take the first one will mean two withdrawals in the same year, increasing the possibility your income will jump into a new bracket, bumping up the rate at which you pay income tax on at least some of your distribution.
