Required Minimum Distributions – What They Are and How They Work


Robert M. Ryerson
Robert M. Ryerson

As a Certified Financial Planner (CFP) at New Century Planning in Freehold, New Jersey, and a financial strategist with The Society of Financial Awareness, Robert M. Ryerson draws on extensive experience with retirement plans and strategies. Robert M. Ryerson has published in Forbes magazine on the topic of required minimum distributions and is currently co-authoring a book on the same subject.

Many retirement plans, including traditional IRAs and all employer-sponsored plans, specify a point in time after which the account holder must start taking withdrawals. Usually, this point is set at when the account holder retires or reaches the age of 70.5 years, whichever occurs later.

The amount that the account holder must withdraw is known as the required minimum distribution, or RMD. The amount depends on a life expectancy number that the IRS calculates, in combination with the account holder’s marital status and how that status affects the account. If the account holder withdraws less than the RMD, the IRS will tax the difference at 50 percent.

Account holders often don’t worry about RMD amounts because they believe that they will be in a lower tax bracket upon retirement. This may be true, although many retirees are surprised to find themselves in the same or even a higher tax bracket due to complex provisional income rules. For these individuals, converting to a Roth IRA or other non-tax deferred account may be a wise move.

The way RMD rules apply to a taxpayer depend completely on his or her personal profile and retirement plan choices. A consultation with a tax or financial professional can provide important clarification.

Published by Robert Ryerson

A financial professional with more than three decades of experience, Robert Ryerson works closely with clients in the Freehold, New Jersey, area to meet their financial planning needs. As a Certified Financial Planner (CFP) at New Century Planning, he focuses on retirement income planning, as well as estate administration, regularly assisting his clients with legacy and estate planning. He also advises them on health and disability insurance, including Medicare, Medicaid, and Medicare Supplement Plans. Mr. Ryerson’s many years helping his clients navigate the complexities of retirement planning gave him a deeper understanding of the healthcare costs that retirees face. In 2013, he drew upon this knowledge to co-author the book What You Don’t Know About Retirement Will Hurt You. Outside of his work at New Century Planning, Robert M. Ryerson is a regular fixture at workshops and seminars on retirement. He has delivered several keynote speeches on the often-confusing topic of required minimum distributions. Mr. Ryerson continues to share his financial expertise as a facilitator of online courses for Certified Public Accountants through The Society for Financial Awareness. In the early 2010s, Mr. Ryerson became concerned about the threat of identity theft after noting the many cybersecurity breaches suffered by major companies. He became a Certified Identity Theft Risk Management Specialist (CITRMS) in 2014. He has since taught identity theft recovery courses at local community colleges. Mr. Ryerson also wrote a book on the topic entitled What’s the Deal with Identity Theft: A Plain English Look at Our Fastest Growing Crime. A graduate of Rutgers University with a degree in economics, Mr. Ryerson began his career in the financial services industry as a stockbroker. He obtained his CFP designation in 1991 and began working as an independent financial planner a few years later. In addition, he is a notary public.

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