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Required Minimum Distributions (RMDs): Returning for 2021

Required Minimum Distributions (RMDs): Returning for 2021

November 12, 2021


The RMD was suspended in year 2020 due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, but eligible account holders must resume distributions in 2021. As the end of the year approaches, we’re reaching out to clients who have yet to withdraw their RMD from their qualified plan accounts (mainly IRAs, 401(k)s, and SEPs). To refresh, required minimum distributions are mandatory disbursements from certain retirement accounts once the account owner reaches age 72 (or 70 ½ before January 1, 2020), with a few exceptions.

See below for a few answers to questions that relate to RMDs:

  • Can I delay taking RMDs?
    • You can delay your RMD beyond age 72 if you are still working and own less than 5% of the company you work for.
    • Only employer-sponsored plan accounts can delay RMDs if the participant is still working. So, the RMD rule is still in play if you have an IRA outside of the company plan account. 
  • When do I need to take my first year RMD?
    • Your first RMD can be taken in the year you turn 72 or as late at April 1 of the following year.
    • Be careful – if you wait until April 1 of the following year for you first RMD, you will need to distribute the current year’s RMD by 12/31. Having two in one year could lead to unwanted tax implications. 
  • Can I convert my RMD to a Roth?
    • No, but you can convert an amount above the annual IRA RMD amount.
    • For example, if your RMD for 2021 is $10,000 and you want to convert $20,000 to a Roth in the same year, the total amount taken out of the IRA would need to be $30,000. 
  • Can I donate my RMD to charity?
    • Yes, but it must be made directly from the IRA to the charity in order to be classified as a Qualified Charitable Distribution (QCD).
    • The amount will not be included in your gross income.
    • The QCD is limited to $100,000 annually per taxpayer. 
  • What do I do if I inherited an IRA from someone who died after 12/31/2019?
    • You must distribute the entire balance by 12/31 ten years after the original account holder passed away (there are a few exceptions for surviving spouse, etc.).
    • You do not have to take an RMD until the 10th year, or you can spread it out. We recommend using a tax accountant to analyze the impacts of these distributions.
    • There is no change if the person you inherited the IRA from passed away prior to 1/1/2020.

Let us know if you have questions or we can help develop a strategy for these distributions,


Matt and Andrew