How to Complete an RMD Calculation Request Form
The IRS requires the owner of an IRA (individual retirement account) to begin taking a required minimum distribution (RMD) from the retirement account at the age of 70. Most people wish to withdraw the smallest amount they possibly can, to preserve capital. You must complete an RMD calculation request form to determine exactly how much that will be.
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Instructions
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Request a Required Minimum Distribution form from the custodian of your IRA the year you turn 70, since required minimum distributions must be made beginning at 70 1/2 years of age. The custodian is the financial institution (bank or brokerage firm) that holds and invests the funds of your retirement account.
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Use the IRA Uniform Lifetime tables to help determine your minimum distribution rate. The tables are part of IRS Publication 590 and can be found at the IRS website (see Resources below). Depending on which table you must use, your required minimum distribution is calculated by dividing the balance of your IRA by the applicable life expectancy or distribution period.
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Determine which life expectancy table you must use. Typically, the uniform life expectancy table is used to give the estimated life expectancy of the account owner and the plan beneficiary. It's important to calculate this carefully, since the less you have to take out of your IRA, the better off you can be when you really need to use your IRA income.
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Check to see if you qualify under the spousal exception rule. If your spouse is your beneficiary and more than 10 years younger, you can use the joint life expectancy table to calculate your RMD. The advantage to this is that the table usually produces significantly lower minimum distribution rates.
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Complete the RMD calculation request form using the life expectancies appropriate to your situation.
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Decide how frequently you would like payments, where they should be sent and whether or not you would like taxes withheld from the distributions. If you fail to indicate how often you would like payments made, the distribution will be made annually by default.
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Submit the application to your financial institution, along with a signature guarantee. Such a guarantee is a typed or handwritten form stamped with or accompanied by a raised seal. It must be done by your bank or brokerage firm, not a notary public.
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Tips & Warnings
Taking only your RMD means the remaining balance continues to be tax-deferred. However, if you fail to take the RMD, there are stiff penalties.
