General Information

• What are Minimum Required Distributions (MRDs)?
• Are there any exceptions?

Calculating Your MRD

• How do I calculate my MRD?
• Will Fidelity calculate my MRD for me?
• Where can I find the MRD Tracker?
• How should I handle year–end transfers or rollovers?
• What if my spouse is more than 10 years younger?
• How are MRDs taxed?
• What if I made non–deductible contributions to my IRA?

Taking Your First MRD

• When should I take my first MRD?
• How should I time my first MRD when it comes to taxes?

Taking Your MRDs Each Year

• How should I take my MRDs if I have multiple accounts?
• What are the deadlines for taking MRDs?
• What are the penalties if I miss a deadline?
• Do I have to take my MRD if I am still working?
• Can I still contribute to my IRAs while taking MRDs?
• Can I donate my MRD to a charity?

Beneficiaries and Stretching Tax Advantages of Assets

• Why is it so important to consider beneficiaries when taking MRDs?
• How do I name a beneficiary?
• Should I convert to a Roth IRA?

General Information

What are Minimum Required Distributions (MRDs)?

Beginning the calendar year after the year you turn 70½, you are generally required to withdraw a minimum amount of money from your tax–advantaged retirement accounts each year. This amount is called a minimum required distribution, or MRD. Note that you can always take more than the MRD amount.

You generally have to take MRDs from any retirement account in which you contributed tax–deferred assets or had tax–deferred earnings. These accounts include:

• Traditional IRAs
• Rollover IRAs
• SIMPLE IRAs
• SEP–IRAs
• Most Keogh accounts
• Most 401(k) and 403(b) plans

Are there any exceptions?

Roth IRAs are an exception. You are not required to take MRDs from a Roth IRA during your lifetime, nor can you satisfy your MRD requirement with a withdrawal from a Roth IRA. Also, if you continue to work beyond age 70½, and do not own more than 5% of the business you work for, you may be able to defer taking distributions from your current employer’s Keogh, 401(k), 403(b), or other employer–sponsored retirement plan until April 1 of the calendar year after the year in which you retire. Please consult your plan administrator to learn more.

Top

Calculating Your MRD

How Do I calculate my MRD?

Generally, your MRD is determined by dividing the adjusted market value of your tax–deferred retirement account as of December 31 of the prior year by an applicable life expectancy factor taken from the Uniform Lifetime Table. Our MRD Calculator can help you determine what to withdraw.

Will Fidelity calculate my MRD for me?

Yes. The Fidelity MRD Tracker shows estimates for all of your eligible Fidelity retirement accounts for the current year. It also shows year–to–date distributions.

With the MRD Tracker, any deposits (i.e., Rollovers, Transfer of Assets) made to an existing account after December 31 of the prior year, are not included in the MRD Calculation Estimate amount. You will need to recalculate your MRDs to take the full amount.

Beneficiary changes made after December 31 are not reflected in the MRD information displayed. Those beneficiary changes will be used for the following year’s calculation. If you have a beneficiary change that should have been taken into consideration for the current year MRD, you will need to recalculate your current year MRD

Other retirement plan accounts held at Fidelity, such as Fidelity Retirement Plan Profit Sharing or Money Purchase and Self–Employed 401(k) accounts, are presented separately and are not aggregated in "All Your Fidelity IRAs" as these accounts are not IRAs and must separately satisfy the MRD requirements from each account.

Note: 401(k), 403(b), or 457 plans recordkept at Fidelity are not included in the MRD Estimate.

Where can I find the MRD Tracker?

Log in to your Portfolio, then choose a retirement account and click on History in the left navigation bar. View your MRD Calculation Estimate on the right side of the screen.

You may also view the MRD Tracker by clicking on "Withdraw from IRA" in the Portfolio Summary area.

How should I handle year–end transfers or rollovers?

The December 31 market value of each of your retirement accounts should be adjusted for any pending year–end transfers or rollovers. For example, if assets were withdrawn from an IRA or qualified employer–sponsored plan within the last 60 days of the prior calendar year, and then a portion or all of those assets were rolled over to a Fidelity IRA this year, you must add the amount of the rollover to the balance of your Fidelity IRA as of December 31 of the prior year. This may also apply to year–end transfers not credited to your account until after December 31, unless the MRD attributable to the amount transferred was distributed from another IRA.

What if my spouse is more than 10 years younger?

If your spouse is more than 10 years younger than you, and if he or she will be the sole primary beneficiary for the entire distribution year, you should use the Joint Life Expectancy Table to calculate your MRD. This will result in a smaller MRD than with the Uniform Lifetime Table. You can use the MRD Calculator to do this calculation.

How are MRDs taxed?

MRDs are taxed as ordinary income for the tax year in which they are taken and will be taxed at your applicable individual federal income tax rate. MRDs may also be subject to state and local taxes. If you made non–deductible contributions to your IRA, you must calculate your MRD based on the total balance, but your taxable income may be reduced proportionately for the after–tax contributions. Please consult a tax advisor to learn more.

What if I made non–deductible contributions to my IRA?

Regardless of whether or not you made non–deductible contributions, you must use the MRD. If you have made non–deductible, after–tax Traditional IRA contributions (or if your account includes any after–tax rollover amounts), you will not have to pay taxes on the portion of your distribution that represents after–tax contributions, provided you have filed IRS form 8606 each year you made a non–deductible contribution. Remember, you will owe taxes on any earnings on those contributions.

Top

Taking Your First MRD

When should I take my first MRD?

You generally have until April 1 of the year following the calendar year you turn 70½ to take your first MRD. This is known as your required beginning date, or RBD. In subsequent years, the deadline is December 31. If you turned 70 between July 1st of last year and June 30th of this year, you will be turning 70½ this year and will need to take your first MRD this year.

How should I time my first MRD when it comes to taxes?

If you take your first MRD between January 1 and April 1 of the year after you turn 70½ , you still need to take your second MRD by December 31 of the same year. Since IRA and Keogh distributions are taxed as ordinary income, this may push you into a higher tax bracket. Also note that if you take your MRD between January 1 and April 1 of the year after you turn 70½ , your December 31 account balance is not reduced by the amount of the MRD taken for the first MRD when calculating the amount of your second MRD. So, be sure to plan your first withdrawal carefully.

Top

Taking Your MRDs Each Year

How should I take my MRDs if I have multiple accounts?

If you have more than one IRA, you must calculate the MRD for each IRA separately each year. However, you may aggregate your MRD amounts for all of your IRAs and withdraw the total from one IRA or a portion from each of your IRAs. If you have qualified plan accounts in addition to your IRAs, you must calculate and satisfy your MRDs for IRAs separately from your qualified plan accounts. If you have more than one qualified retirement plan account, you must calculate and satisfy your MRD requirements separately for each qualified plan account. For example, if you have both a profit–sharing Plan and a self–employed 401(k), you must separately calculate and withdraw an MRD from each plan. Also, MRDs for inherited IRAs must be satisfied separately from your other IRAs.

What are the deadlines for taking MRDs?

You may withdraw your annual MRD in one distribution or make withdrawals periodically throughout the year, but the total annual minimum amount must be withdrawn by the deadline of December 31 (except for your first MRD, as explained above).

What are the penalties if I miss a deadline?

The penalty for taking less than your minimum required distribution can be severe. If you withdraw less than the minimum required amount, the IRS may assess a penalty equal to 50% of the amount of the MRD not taken.

Do I have to take my MRD if I am still working?

Yes, with certain exceptions: (1) Roth IRAs are not subject to MRDs while you are living; and, (2) in some circumstances you may delay MRDs from a Keogh, 401(k), 403(b), or other employer–sponsored retirement plan account until you retire, as discussed above in the section titled "A Few Exceptions". If you are still working and have other tax–deferred retirement accounts in addition to your current employer’s workplace savings plan, you must satisfy your MRD for those other accounts each year after you reach age 70½ .

Can I still contribute to my IRAs while taking MRDs?

You can contribute to a Roth IRA after age 70½ as long as you have compensation and meet the eligibility requirements for adjusted gross income. Otherwise, you generally cannot contribute to any other kind of IRA in the year you turn 70½ or any year thereafter.

Can I donate my MRD to a charity?

Yes, IRA owners age 70 1/2 and older can distribute amounts from an IRA directly to a qualifying charity. The amount donated is federal income tax free and can be used to satisfy the IRA MRD requirements for the year. These Qualified Charitable Distributions ("QCDs") were due to expire with 2007 distributions. However, the recently passed Emergency Economic Stabilization Act of 2008 extended the availability of these types of distributions to 2008 and 2009.

Find out more about MRD "QCD" requirements.

Top

Beneficiaries and Stretching Tax Advantages of Assets

Why is it so important to consider beneficiaries when taking MRDs?

Retirement accounts generally pass outside the instructions of a will. Your beneficiary designations will determine who receives your retirement assets upon your death. That’s why it is so important to carefully consider whom you have designated as a beneficiary on your accounts. Also, there are opportunities for beneficiaries to stretch out the tax–deferred growth of IRA assets after the death of the original account owner. With proper planning, many beneficiaries can minimize their required distributions and potentially maximize the advantage of continued tax deferral.

See Inherited IRAs for more information.

How do I name a beneficiary?

A designated beneficiary is an individual, charitable organization, estate, or other entity that you have named to receive any assets in your account upon your death. Update your beneficiaries (log in required). You may also complete a beneficiary form.

Should I convert to a Roth IRA?

If you have been thinking about converting Traditional IRA assets to a Roth IRA, you should consider making that decision before beginning MRDs for two reasons:

• Roth IRAs are not subject to MRDs during the account owner’s lifetime
• MRDs are not included when determining the maximum income limits for converting to a Roth IRA.

See Converting IRAs for more information.

Top