April 1 Deadline for Required Retirement Plan Distributions

The IRS reminds taxpayers who turned 70-1/2 during 2012 that, in most cases, they must start receiving required minimum distributions (RMD) from individual retirement accounts (IRA) and workplace retirement plans by Monday, April 1, 2013. The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans including Code Sec. 401(k), Code Sec. 403(b) and Code Sec. 457 plans. The special April 1 deadline only applies to the required distribution for the first year. For all subsequent years, the RMD must be made by December 31. 

Generally, taxpayers must take two required distributions in the year they turn 70-1/2. The first distribution must be taken by April 1. A second distribution must be taken by December 31. An interactive research aid to help determine required minimum distributions from employer plans and IRAs can be found at Tax Research Consultant Interactive Research Aids, 14,200. 

Affected taxpayers who turned 70-1/2 during 2012 must figure the required minimum distribution for the first year using their life expectancy on December 31, 2012, and their account balance on December 31, 2011. The trustee reports the year-end account value to the IRA owner on Form 5498 in Box 5. Worksheets and life expectancy tables for making this computation can be found in the Appendices to Publication 590. Most taxpayers use Table III (Uniform Lifetime) to figure their RMD. For a taxpayer who turned 71 on or before December 31, 2012, for example, the first required distribution would be based on a life expectancy of 26.5 years. A separate table, Table II, applies to a taxpayer married to a spouse, more than 10 years younger, who is his or her only beneficiary. 

Although the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions. Employees of public schools and certain tax-exempt organizations with Code Sec. 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals. 

Taxpayers should begin planning now for any distributions required during 2013. An IRA trustee must either report the amount of the RMD to the IRA owner or offer to calculate it for the owner. Often, the trustee shows the RMD amount in Box 12 on Form 5498. For a 2013 RMD, this is the 2012 Form 5498 issued in January 2013. For tax-year 2013, IRA owners can use qualified charitable distributions (QCD) paid directly to an eligible charity to meet part or all of their RMD obligation. Available only to IRA owners 70-1/2 or older, this provision allows the IRA owner to exclude from income up to $100,000 of distributions to these QCDs.