FAQs About Required IRA Distributions

I’ve received a lot of questions recently about required minimum distributions from IRAs. Here are answers to several of your questions, some good resources to help, and a heads up about a fast-approaching deadline for people who turned 70½ last year.

I turned 70½ last year and haven’t taken my first required minimum distribution from my IRA yet. When is the deadline for taking the first withdrawal?

The deadline for taking your first required minimum distribution is approaching quickly: If you just turned 70½ in 2010, you must take your first distribution by April 1, 2011. And you must also take a second distribution -- for age 71 -- by December 31, 2011. After that, you’ll need to take your required minimum distributions by December 31 each year.

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Your required minimum distributions are based on your age, your life expectancy (according to IRS tables) and the balance in all of your traditional IRA accounts at the end of the previous year. See our Calculate Your Required Minimum Distribution calculator for help determining how much money you need to withdraw. Also see IRS Publication 590 for more information.

Don’t delay.The penalty for missing an annual distribution is steep: 50% of the amount you failed to withdraw.

If I convert my traditional IRA to a Roth this year, does that mean I can skip taking my required minimum distribution for 2011?

No. You must take your RMD for the year before you convert your traditional IRA to a Roth. But starting in the year after you make the switch to the Roth, you’ll never have to take required minimum distributions from that account again -- Roths don’t have any RMD requirements.

Can I donate my required withdrawal for 2011 to charity rather than pay taxes on it?

Yes. If you’re over 70½, you can transfer up to $100,000 tax-free from your IRA to a charity in 2011. The money transferred can count as your required minimum distribution but isn’t added to your adjusted gross income as it normally would be. (However, you can’t double dip and take a charitable deduction for the contribution from the IRA..) To qualify for the income exclusion, the money must be transferred directly from the IRA to the charity. The check can’t be made out to you. Your IRA administrator can walk you through the process. For more information, see How to Donate IRA Distributions to Charities.

For more information about RMDs, see Dealing With Required IRA Distributions. Fidelity also has a helpful RMD FAQ.

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.