Clearing Confusion on client’s initial RMD

Submitted by Bill Monte on Mon, 2018-01-29 23:10

Hi guys,

I have a client who was born on 9/23/1947 so he will turn 70 1/2 years of age on 3/23/2018, which would be his Required Beginning Date. Here’s my confusion. When can he actually take his initial RMD? Can he take it as early as January 1, 2018 because it is still in the tax year that he turns 70 1/2 or does he have to wait at least until 3/23/2018, his Required Beginning Date to make that withdrawal? I know that he also has the ability, being his initial RMD, to take the withdrawal by 12/31/2018 or as late as 4/1/2019.

Here’s my next question. Let’s assume he takes his first RMD in the 2018. Does he use 26.5 from the Uniform Lifetime Table for the life expectancy factor because he will be 71 in the 2018 tax year? Or does he still use 27.4 because it’s still his initial RMD? Compounding this question further…what if he waits to take his first RMD until 4/1/2019. He will turn 72 in 2019 so does that mean he uses 25.6 as the life expectancy factor or still 27.4 because again it’s still his initial RMD? And if he does in fact delay his initial RMD until 4/1/2019, we know that he needs to then take his 2nd one by 12/31/2019, so what life expectancy factor would he then use on that second RMD in 2019?

I hope this all makes sense! Thanks so much for your help!!!

Bill M.



Submitted by Alan - IRA critic on Tue, 2018-01-30 01:05

  • His required beginning date is 4/1/2019 (deadline for 2018 RMD). 3/23/18 is the just the day he reaches 70.5. Since he reaches 70.5 in 2018, the first distribution taken in 2018, as early as 1/1/2018 is deemed to apply to his 2018 RMD, so he can take his 2018 RMD anytime now. That said, if he wishes to make a QCD, he must wait until 3/23 as a QCD cannot be done until actually reaching 70.5 to the day.
  • Since he will reach age 71 by the end of 2018, his first RMD distribution year, his divisor will be 26.5 applied to the 12/31/2017 balance. If he wait until early 2019 to take his 2018 RMD, the divisor is not changed. The RMD that applies to 2018 is the same whether he takes it in 2018 or early 2019.
  • The 2019 RMD is due by 12/31/2019. He uses the 12/31/2018 balance and a divisor of 25.6 since he will reach 72 by the end of 2019.
  • Note that delaying the 2018 RMD is not an all or nothing decision. He can also take PART OF his 2018 RMD in 2018 and the rest by 4/1/2019. While the number crunching can be complex, there are cases where a partial delay produces the lowest total tax bill for the two years, often due to the way SS benefits are taxed.

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