A Financial Checklist for RMDs
Managing your RMDs each year doesn’t have to be overwhelming. Following a simple checklist can keep you on track and ensure you meet all requirements without stress. Here is a step-by-step guide to follow annually.
First, identify all your retirement accounts. Early in the year, make a list of every traditional IRA, SEP IRA, SIMPLE IRA, 401(k), and 403(b) you own. Don’t forget any old workplace plans you may have left behind. Confirm you have the most recent statements for each one.
Second, find the previous year-end balance for each account. Your RMD for the current year is based on the account value on December 31 of last year. This number should be clearly stated on your year-end statement from your financial institution.
Third, calculate your RMD for each account. You can do this yourself using the IRS Uniform Lifetime Table or, more easily, ask your financial institution. Most custodians calculate the RMD amount for you as a courtesy and include it on your statements or online portal. Verify their calculation for your own peace of mind.
Fourth, create a withdrawal plan. Decide how and when you will take the distribution. Will you take it as a lump sum? In monthly installments? Will you have taxes withheld? Will you use a QCD for a charitable donation? Set up your plan well before the end of the year to avoid the December rush.
Fifth, execute your plan and keep records. Once you take your distribution, keep a record of the transaction. Note the date, the amount withdrawn, and any taxes that were withheld. Store this confirmation with your tax documents for the year. This simple process will ensure you never miss a beat.
