Required minimum distributions (RMDs) are the minimum amounts that must be withdrawn from a retirement account when a participant reaches age 70 ½ or if later, the year he or she retires. The RMD rules apply to all employer sponsored retirement plans.
The deadline for taking the first RMD is April 1st of the year following the year the account owner turns 70 ½. For each year afterward, the requirement to take the RMD is by December 31st. The calculation for how much is required to be taken is generally calculated based on a life expectancy table. The prior year balance at December 31st is divided by the life expectancy factor that is published by the IRS in Publication 590, Individual Retirement Arrangements (IRAs).
Another important fact to note is that the retirement plan account owner is ultimately responsible for calculating the amount of the RMD. The IRA custodian or administrator may calculate the amount but is not the responsible party. Additionally, it is important to calculate the RMD and withdraw the full amount prior to the deadline for withdrawal as accounts that require the RMD that are not withdrew by the deadline are taxed at 50%.