Q:

What are the required minimum distributions for a 401(k)?

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Quick Answer

Required minimum distributions for 401(k) account holders vary depending on the age and identity of the beneficiary, according to the Internal Revenue Service. Account owners must receive a minimum distribution from the account each year, and the distribution amount may change as the balance changes and the recipient ages.

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Full Answer

When the account holder retires or reaches age 70 1/2, minimum distributions must be withdrawn each year from the balance, explains the IRS. An IRS Uniform Lifetime Table is used to determine a percentage of the total balance and calculate the minimum distribution amount. If the only recipient is a spouse who is 10 years younger than the account owner, a different table is used. Since the minimum required distribution varies, 401(k) holders should verify the correct distribution with the IRS or by obtaining current information from the IRS website.

Account owners who fail to take the minimum required distribution may owe a 50 percent excise tax on funds not distributed in accordance with IRS requirements, states the IRS. If the account owner is deceased, the full value of the account must generally be distributed to the beneficiary within five years of the owner's death or throughout the beneficiary's lifetime beginning within one year of the owner's death.

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