Required Minimum Distributions (RMDs)

Retirement accounts, such as traditional IRAs and 401(k), 403(b), and 457(b) plans, as well as IRA-based plans, such as SEPs, SARSEPs and SIMPLE IRAs are all great account types for retirement savings. Contributions to these accounts are typically made with pre-tax dollars and, unlike most other investments, are allowed to grow tax-deferred over time. But it’s important to take note that these accounts also come with certain conditions. Important among these is that after account holders reach a certain age, they must begin to liquidate assets by taking annual distributions called Required Minimum Distributions (RMDs).

When do I need to start RMDs?

The age for taking your first RMD increased in 2020 to 72 years from 70.5 years. Therefore, your first RMD must be taken by April 1st of the year after you turn 72. For all subsequent years, including the year in which you were paid the first RMD by April 1st, you must take your RMD by December 31st of that year. In retirement accounts sponsored by your employer, such as 401(k)s or 403(b)s, your plan often allows you to defer taking RMDs until after your retirement. If you have inherited retirement assets, the RMDs rules are different, and your advisor can help you determine what method and timeframe you must use to withdraw your assets.  

How much do I need to take out?

You can calculate your required RMD amount by dividing the prior December 31st balance of your retirement account by a life expectancy factor that is published in a set of tables by the IRS (Publication 590-B, Distributions from Individual Retirement Arrangements). There are three table options. The one you choose depends on your situation. A most commonly used option is the Uniform Lifetime Table III, which applies to individuals if their spouse is not their sole beneficiary, or, their spouse is not more than ten years younger than the account holder.

Example below

Suppose, hypothetically speaking, you are 72 years old and your IRA balance at 12/31 is $50,000. To calculate your RMD for the current year would be $50,000 divided by 27.4 or $1,825.

If you have multiple IRA accounts, you can use the combined total in your payment calculation but take the distribution from any one or mix of the accounts. You cannot, however, combine different types of accounts, such as 401(k)s and IRAs.

What happens if you miss your RMDs?

If you fail to take your RMD or fail to take the full amount due, the IRS taxes the amount not withdrawn at 50%! Obviously, this is a severe penalty that you should make every effort to avoid. Fortunately, this penalty may be waived if you can establish that the shortfall in distributions was due to reasonable error and that steps are being taken to remedy the shortfall. To qualify for this consideration, you need to file IRS Form 5329 and attach a letter of explanation.

Remember you are responsible for making sure your RMDs are taken and that they are calculated correctly. However, your financial advisor can help you through the process to ensure that you do not incur a penalty, and all goes smoothly.

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Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.