Among the rules set by the Internal Revenue Service, or IRS, regarding required minimum distributions (RDS) for annuities is that once the age of 70½ has been reached, the contributor is expected to start making removals, states FSD Financial Services. The deadline for removals is Dec. 31 every year.
Required Minimum Distributions refer to the minimum amounts that must be removed from a tax-deferred plan once the age of 70½ has been attained. Examples of Tax deferred plans are Tax Sheltered Annuities, Traditional IRAs and Qualified Retirement Plans. Failure to make removals can attract a 50 percent tax penalty, states FSD Financial Services.
The deadline for initial RMD is April 1 of the year that follows the year the age of 70½ is attained. If the first removal is done on April 1, then two removals must be done during the following year. One must take place on April 1 and the other must take place by Dec. 31, explains FSD Financial Services. Participants of Tax Sheltered Annuities or Qualified Retirement Plans who own below 5 percent of business sourcing the contribution, and are still employed by the business in mention, the removal can be delayed until April 1 of the year after the age of 70½ is attained. Optionally, the delay can be extended till April 1 of the year following the year of retirement, states FSD Financial Services.