Q:

What does "RMD" mean when referring to an IRA?

A:

Quick Answer

RMD stands for "required minimum distribution" and is the minimum amount an individual must withdraw from his IRA or retirement plan account once he reaches the age of 70 1/2 according to the IRS. Roth IRAs do not require withdrawals until after the death of the account owner.

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Full Answer

RMDs are calculated by dividing the prior year-end fair market value of the IRA account by the applicable distribution period or life expectancy according to Investopedia.com. The Uniform Lifetime Table is the most commonly used of three life-expectancy charts for determining RMDs according to BankRate.com. Some qualified plans will allow participants to defer beginning RMDs until they actually retire even if they are older than 70 1/2 according to Investopedia.com.

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