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Required Minimum Distributions (RMD)s Explained

Uniform Distribution Table

 

Source: IRS, Publication 590-B Appendix B, Table III (2017)

 

RMDs

 

1.For calculation purposes, the new IRS Uniform Distribution Table assumes a life expectancy based on the owner’s age and an assumed beneficiary who is 10 years younger. It usually doesn’t matter if there is a beneficiary on the account or how old the beneficiary actually is. (The only time a different table would be used is when the owner is more than 10 years older than the spouse beneficiary.)

 

2.The complex calculation formulas for the RMD – recalculation, nonrecalculation, or hybrid – are gone. All that is required to calculate the RMD is to divide the year-end value of the retirement account by the factor from the table.

 

RMD Key Benefits

 

1.The use of a uniform table means that owners may change beneficiaries after their required beginning date without changing the amount of the RMD. Previously, a beneficiary change could increase the amount of the RMD.

 

2.The new rule may lower the RMD, thus lowering the tax obligation on that distribution.



* Distributions are subject to a 50% excise tax penalty if RMD is not taken after 70 ½

 

* As with any financial matter, please consult with your qualified financial professional before taking any action.

 

* Neither Southwest Investment Advisors nor LPL provides tax advice.

 

This report is prepared for general circulation and is for informational purposes only.  It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or service.  Market prices and other data may be obtained from outside sources and is not warranted as to completeness or accuracy.