SURENDRA N. PANDEY: Columnist doesn’t answer IRA question

It appears that Mr. Bruce Williams did not address the specific question Ben (Monday’s Albany Herald) asked about the “lowest” amount he must withdraw from his IRA. In summary, the tax law says that those reaching the age of 70 ½, must start withdrawing from their 401(k) or Traditional IRA accounts a minimum amount determined by their life-expectancy. IRS has published a table that gives the factor based on age that must be used to calculate the amount. The first year when one reaches 70½, the Required Minimum Distribution (RMD) must be made no later than 1st April of the following year. Thereafter, the RMD must be made by the year-end (31st December) for each subsequent year.

For example, if the DOB is March 1, 1947, RMD must start for the year 2017 and the first RMD must be made no later than April 1, 2018. However, if the DOB is August 1, 1947, the individual reaches 70½ in February 2018, hence the first RMD must be made no later than April 1, 2019. The RMD for subsequent years must be made by 31st December of each year.

One can withdraw an amount greater than the RMD, but not less. There is no such requirement for withdrawing from Roth IRA, which may be fully passed on to the designated beneficiary, who is then subject to RMD rules. The RMD rule applies to inherited IRA whether it is Traditional IRA or Roth.

The first-year factor is 27.4 for people age 70. Which means the RMD is equal to IRA balance on 31st December of the prior year divided by 27.4. The factor keeps on decreasing with increasing age.

SURENDRA N. PANDEY

Albany