Your IRA Required Beginning Date is April 1 NOT April 15

Tuesday, March 24, 2015

By Joe Cicchinelli, IRA Technical Expert
Follow Me on Twitter: @JoeCiccEdSlott

If you turned age 70 ½ last year in 2014 and have a traditional, SEP or SIMPLE IRA, you must start taking required minimum distributions (RMDs) for that year and every year going forward. But your actual deadline for taking your age-70 ½ IRA RMD is April 1, 2015. This April 1 date is known as the required beginning date (RBD) and is often confused with the April 15 tax-filing deadline. If you were older than 70 ½ last year, your RMD was due by December 31, 2014.

Assuming you were age 70 ½ last year and took your RMD last year, then you don’t have to worry about the April 1, 2015 deadline. But if you didn’t take your 2014 RMD last year, you must take it by Wednesday April 1, 2015 to avoid a 50% penalty (that’s not a misprint) on the missed distribution. Note that the deadline is April 1 not April 15. Do not miss the April 1 deadline by even one day, because if you do, the 50% penalty applies. You cannot get an extension from IRS to take your RMD after April 1.

Your RMD for 2015 is also due this year by December 31, 2015. If you didn’t take your 70 ½-year RMD last year, but instead waited until on or before April 1, 2015, both RMDs you take this year will be included in your 2015 income. This “bunching of income” may cause you to pay more taxes than if you had taken last year’s RMD in 2014, but unfortunately there’s nothing you can do about it now. At this point there’s no way to take your 2014 RMD in 2015 and have it count as taxable for last year because IRA distributions are taxed in the year they’re taken.

The confusing part of the April 1 deadline is that it’s so close to the April 15 tax-filing deadline for completing your 2014 federal income taxes. Also, if you’re thinking about making a prior year (2014) traditional or Roth IRA contribution this year, you must do so by April 15, 2015. Even if you get an extension for filing your 2014 tax return, that extension does not extend your IRA contribution deadline; it must be made by April 15, 2015.

 

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