Understanding Required Minimum Distributions (RMDs)

RMD rules affect how and when you withdraw from retirement accounts—and come with steep penalties if mishandled. Learn how to stay compliant and aligned with your estate plan.

🧭 Understanding Required Minimum Distributions (RMDs)

If you own a traditional IRA, 401(k), or other tax-deferred retirement account, the IRS will eventually require you to withdraw a minimum amount each year—called a Required Minimum Distribution (RMD).

Recent changes in federal law have updated the starting age, added steep penalties for mistakes, and impacted estate planning outcomes. That’s why it’s critical to review your RMD strategy with both tax and legacy goals in mind.

📆 When Do RMDs Start?

The age you must begin RMDs depends on your birth year:

Birth Year	RMD Age	First RMD Due
1950 or earlier	70½	April 1 of the year after turning 70½
1951 – 1959	73	April 1 of the year after turning 73
1960 or later	75	April 1 of the year after turning 75

If you delay your first RMD, you’ll need to take two distributions in that same year, which can increase taxable income and affect Medicare premiums.

📊 How Are RMDs Calculated?

Each year’s RMD is based on:

1️⃣ Your retirement account balance as of December 31 of the prior year2️⃣ Your life-expectancy factor from IRS tables (updated in 2022)

Example: If you're 75 with a $1 million IRA, and your IRS life expectancy factor is 24.6:→ $1,000,000 ÷ 24.6 = $40,650 RMD

Most use the Uniform Lifetime Table. If your spouse is more than 10 years younger and is the sole beneficiary, you may qualify to use the Joint Life Table, which results in smaller RMDs.

🏛 Inherited IRAs and RMD Rules

If you inherit an IRA:

✅ Spouses can roll the IRA into their own or treat it as inherited

✅ Most non-spouse beneficiaries must withdraw the full balance within 10 years (“10-year rule”)

✅ Eligible designated beneficiaries (minor children, disabled individuals, etc.) may use the life expectancy method

IRS guidance on inherited IRAs is evolving—individualized legal advice is crucial.

🧾 Can RMDs Be Reduced or Avoided?

✅ Roth IRAs: No RMDs during the original owner’s lifetime

✅ Inherited Roth IRAs: Still require distributions, but withdrawals are tax-free

✅ Qualified Charitable Distributions (QCDs): If you're 70½ or older, you may direct up to $108,000 (2025) per year from your IRA to a charity:

• ✅ Counts toward your RMD

• ✅ Not included in taxable income

• ✅ May lower Medicare surcharges and Social Security taxation

⚠️ Must go directly to a qualified public charity (not DAFs or private foundations)

🔍 Common Mistakes to Avoid

❌ Forgetting to take your RMD — triggering a 25% penalty (reducible to 10%)

❌ Taking the first RMD too late and getting taxed twice in one year

❌ Miscalculating the withdrawal using incorrect tables or old balances

❌ Not coordinating RMDs with your broader tax and estate plan

❌ Ignoring special rules for inherited IRAs or non-U.S. beneficiaries

✍️ Final Thoughts

Required Minimum Distributions aren’t just about income—they impact your tax bracket, Medicare premiums, and the legacy you leave behind. Recent law changes have increased both complexity and risk.

📞 Before your next withdrawal, speak with The Law Office of Jin-Wook Kim, P.C. We help Korean-American families and retirees in New York align their RMD strategy with long-term financial and estate-planning goals. Let’s make sure your retirement accounts work for you—not against you.