ANNAPOLIS, Md. (March 15, 2018) –The Maryland Comptroller’s Office and Internal Revenue Service today remind taxpayers who turned age 70½ during 2017 that, in most cases, they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans bySunday, April 1, 2018.
The April 1 deadline applies to all employer-sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs, however, they do not apply to ROTH IRAs.
TheApril 1RMD deadline only applies to the required distribution for the first year. For all subsequent years, including the year in which recipients were paid the first RMD byApril 1, the RMD must be made byDec. 31. A taxpayer who turned 70½ in 2017 and receives the first required distribution (for 2017) onApril 1, 2018, for example, must still receive the second RMD by Dec. 31, 2018.
Affected taxpayers who turned 70½ during 2017 must figure the RMD for the first year using the life expectancy as of their birthday in 2017 and their account balance on Dec. 31, 2016. The trustee reports the year-end account value to the IRA owner onForm 5498in Box 5. Worksheets and life expectancy tables for making this computation can be found in the appendices toPublication 590-B.
Though the April 1 deadline is mandatory for all owners of traditional IRAs and most participants in workplace retirement plans, some people with workplace plans can wait longer to receive their RMD. Employees who are still working usually can, if their plan allows, wait untilApril 1of the year after they retire to start receiving these distributions. See Tax on Excess Accumulation inPublication 575. Employees of public schools and certain tax-exempt organizations with 403(b) plan accruals before 1987 should check with their employer, plan administrator or provider to see how to treat these accruals.