By Jaclyn Uloth

How to Calculate Required Minimum Distribution (RMD)

Saving for retirement can be a complicated journey, especially once you get older and start getting into the weeds of rules and regulations. One of the many things you may come across includes required minimum distribution. This rule is one of the upsides of having an IRA account (more on this later). If you are interested in learning more about required minimum distributions, how to calculate your required minimum distribution, and how it all ties together with your precious metals IRA, keep reading.

What are Required Minimum Distributions?

According to AARP, an RMD is the smallest amount you must withdraw from your tax-deferred retirement accounts every year after a certain age. At some point in your life, you may have put money into tax-deferred retirement accounts, such as Individual Retirement Accounts (IRAs) and 401(k) workplace retirement accounts. The key words here are “tax-deferred.” You postponed taxes on your contributions and earnings; you didn’t eliminate them. Eventually, you must pay tax on your contributions and earnings. RMDs make sure that you do that.

If you were born after June 30, 1949, you must start taking RMDs by April 1 of the year after you turn 72. Let’s say you celebrated your 72nd birthday on July 4, 2021. You must take the RMD by April 1, 2022. You’ll have to take another RMD by Dec. 31, 2022 and by Dec. 31 each year after that.

If you were born before July 1, 1949, you had to start taking your RMDs by April 1 of the year after you hit age 70 ½ (that’s six months after your 70th birthday). The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted in March 2020, suspended all RMDs for 2020. If you would normally have taken an RMD on Dec. 31, 2020, you must have taken one by Dec. 31, 2021.

What the IRS Says

Generally, a RMD is calculated for each account by dividing the prior December 31 balance of that IRA or retirement plan account by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).

There are a wealth of resources available to help you correctly calculate your required minimum distribution, including this one from the US Securities and Exchange Commission.

Also, according to the IRS, tf an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%. The account owner should file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored AccountsPDF, with his or her federal tax return for the year in which the full amount of the RMD was not taken.

Retirement accounts that require RMDs include:

Traditional IRAs
Simplified Employee Pension (SEP) IRAs
Savings Incentive Match Plan for Employees (SIMPLE) IRAs
401(k)s
Nonprofit 403(b) plans
Government 457 plans
Profit-sharing plans, and
Other defined contribution plans

What is the Best IRA?

According to AARP, Roth IRAs are funded with after-tax contributions and don’t require RMDs until after the owner dies. If you’re still working and have a traditional 401(k) or other workplace-defined contribution plans, you may be able to defer RMDs until April 1 of the year after you stop working.

One of the best IRAs you can have is a Precious Metals IRA. By rolling over your IRA, 401(k), 403, TSP, or 457 Plan into our Precious Metal IRA Account, you can achieve the same profits that you would gain by purchasing gold or silver directly while also enjoying the benefits that your retirement account provides. We have a proven four-step process that makes opening a precious metals IRA easy, and we guarantee you the highest caliber customer service. Our IRA specialists will answer your questions, work with your current custodians to ensure a seamless transition, provide you a free metal evaluation, and continually help you review your portfolio.

About Priority Gold

Saving for retirement can be a complicated, rocky road. If you are unsure of what route you should take, we can help you. If you already know what route to take and are ready to jump in and invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with a BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.

We specialize in providing customers with precious metals investment services with Security, Liability, and Great Convenience. Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives.

We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. And gold shows up on schedule. Priority Gold guarantees the highest standards of customer service, which comes with honesty, professional conduct, and Ethical Code of Business.

For more information, visit us at prioritygold.com