Clients who have attained age 70½ are required to take annual taxable distributions from their retirement accounts. Here are a few tips that you will need in assisting your clients with Required Minimum Distribution (RMD) calculations.
What is a Required Minimum Distribution?
In the past clients over 70½ who have an IRA or Qualified Retirement Plan are required to withdraw their RMD by December 31st. The TD AMERITRADE accounts that are affected include:
IRA
Spousal IRA
Rollover IRA
SEP IRA
SIMPLE IRA
Profit Sharing Plan
Money Purchase Pension Plan
Individual 401(k)
401(k)
403(b)
Please note that the RMD requirement for tax year 2009 has been suspended as a result of H. R. 7327, the Worker, Retiree and Employer Recovery Act of 2009
Does this waiver provide relief to those clients that turned 70½ in 2008 but opted to take advantage of the one time extension until no later than April 1st, 2009?
No, clients who turned age 70½ in 2008 are obligated to satisfy the 2008 RMD no later than April 1st, 2009.
How is the Required Minimum Distribution Calculated?
The RMD is calculated by dividing the Year-End Balance by the Uniform Lifetime Factor, which is obtained from a standardized IRS table. Please remember, that you must take into consideration all of your client's retirement accounts held at other custodians, not just the accounts held at TD AMERITRADE.
Advisor and Client Notification
In past years we would send you an important reminder regarding your client's IRA and Qualified Retirement Plan accounts with TD AMERITRADE Institutional. The reminder informs you that we are required by the IRS to notify your clients, who are age 70½ or older, that we have the capability of providing them with their Required Minimum Distribution Calculation. Please note that this letter is not required as a result of 2009 RMD relief. As a result of this development, we have sent impacted clients a courtesy letter informing them that RMDs for tax year 2009 are not required.
A Few IRS Rules
TD AMERITRADE uses the Uniform Lifetime Table in order to provide RMD calculations to clients, which is required by the IRS. If the client's sole beneficiary is his or her spouse, and the spouse is more than 10 years younger than the IRA owner, then a "Joint Calculation" may be used. Please contact Amy Tillson or Anne Faught, the Institutional Services Retirement Plan Specialists, at 1-800-431-3500, with questions pertaining to this "Joint Calculation".
The client's age that is used for the current year RMD calculation is the age that they will be as of December 31 of the current year.
If you have any questions regarding your client's Required Minimum Distributions, please contact our Retirement Plan Specialists Amy Tillson or Anne Faught at 800-431-3500.
Last Updated: March 3, 2009
