RMD Statements for IRA Owners Are in the Mail: 7 Things You Need to Know

By Sarah Brenner, IRA Analyst

If you are required to take an RMD (required minimum distribution) from your IRA for 2016, your IRA custodian is required to send an RMD statement to you by January 31, 2016. Here are seven things you need to know about this important information, which will be arriving in your mail sometime in the next few weeks.

1. RMD Required

The RMD statement reminds you that you have an RMD for 2016. Statistics have shown that many IRA owners do not take their RMDs. The IRS requirement that custodians send RMD statements is in part designed to improve those statistics. Your RMD statement puts you on notice early in 2016 that you have an RMD for the year.

2. Deadline

The RMD statement will also tell you the deadline for taking your 2016 RMD. If you turn age 70 ½ in 2016, this is the first year for which you’ll have to take an RMD, and your statement will tell you that your deadline for taking your 2016 RMD is April 1, 2017. If you turned age 70 ½ in a previous year, your statement will tell you that your RMD deadline is December 31, 2016

3. Amount

Your RMD statement may include an your RMD amount for 2016. Some IRA custodians do this calculation for you. Other IRA custodians include a statement offering to calculate your RMD upon request.

4. Reporting to the IRS

The statement will tell you that the IRA custodian will be reporting the fact that you have an RMD for 2016 to the IRS. Consider yourself warned that the IRS has been informed that you must take a 2016 RMD!

5. No RMD Statements for Beneficiaries

If you are an IRA beneficiary, you may have to take an RMD from an inherited IRA for 2016. Currently, the IRS does not require IRA custodians to send RMD statements to beneficiaries. A beneficiary will not receive an RMD statement, but will likely still need to take a 2016 RMD.

6. May Be Included with FMV Statements

IRA custodians are required to provide IRA owners with the December 31, 2015 fair market value (FMV) of their IRAs by January 31, 2016. Your IRA sponsor may include your RMD statement with the FMV statement.

7. Default Calculation Use

Be careful! While your IRA custodian may provide you with your calculated RMD amount, your custodian is permitted to use certain defaults in the calculation. They may use the December 31, 2015 balance without any adjustments and may use the Uniform Lifetime table. For most IRA owners, this will result in an accurate RMD calculation, but for some it will not. For example, if you had an outstanding rollover or transfer, or if your spouse is the sole beneficiary of your IRA and is more than 10 years younger than you, you will need to adjust the calculation to find your actual RMD for 2016.

The RMD statement is for information purposes. You do not need to file it with your tax return. Take a few minutes to read through your statement and be sure there are no errors. If you have any questions about the statement or your RMD in general, you may want to consult with a knowledgeable advisor.