A taxpayer turns age 73 in Year 1. They have a Traditional IRA with a balance of $500,000 as of December 31, Year 0. The Uniform Lifetime Table factor for age 73 is 26.5. What is the deadline and amount for the first Required Minimum Distribution (RMD)?

Answer options:

December 31, Year 1; Amount $18,868

April 1, Year 2; Amount $0 (RMDs start at 75)

April 1, Year 2; Amount $18,868

April 1, Year 2; Amount $50,000

How to approach this question

Identify the Required Beginning Date (April 1 of year following age 73). Calculate amount: Prior Year End Balance / Life Expectancy Factor.

Full Answer

C.April 1, Year 2; Amount $18,868✓ Correct

IRC §401(a)(9). Under SECURE 2.0, RMD age is 73. The first distribution must be made by April 1 of the year following the year the taxpayer turns 73. Calculation: $500,000 / 26.5 = $18,867.92.

Common mistakes

Thinking the deadline is Dec 31 of Year 1 for the first payment.

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