Taking Required Minimum Distributions

Once you reach 70 ½, the IRS requires you to start taking money out of certain IRAs in the form of Required Minimum Distributions (RMDs). Key things to know about RMDs:

RMD rules apply to Traditional, Rollover, SIMPLE and SEP IRA accounts
The amount you must withdraw is calculated each year based on the value of your accounts at the end of the previous year and your life expectancy
You must pay income taxes on your withdrawals
You face a 50% tax penalty on insufficient or late RMD withdrawals
You may withdraw more than the Required Minimum Distribution amount if you wish

Help with your choices

Schwab can help you plan for RMDs and help you keep your retirement investments working for you even after your required distributions begin. Once you are ready to request your RMD from your Schwab retirement account(s), call a Schwab representative at 800-435-4000.

Three steps to taking your RMD

Your first RMD must be taken no later than April 1 of the year following the calendar year in which you turn age 70½.
Subsequent RMDs must be taken by December 31 of each year.

Download the Schwab RMD Guide and use the RMD Worksheet (page 6) and the Life Expectancy tables (pages 7–8) to calculate your RMD.

Transfer securities in-kind from your IRA into a non-retirement account
Liquidate investments to transfer cash

Choose how to receive your funds

Transfer funds online to a non-retirement account at Schwab or outside financial institution
Request a check
Request your distribution by phone at 800-435-4000

If you have more than one IRA account

Each account’s RMD must be calculated separately. You can then total the RMDs for all your IRAs, and take a distribution from any one IRA or combination of IRAs you choose.

Get help taking your RMD

Schwab can calculate your RMD from your Schwab retirement account(s) for you. We can also process your distributions requests over the phone. Call a Schwab representative at 800-435-4000 for assistance.

Keep an eye on taxes

Keep the following in mind as you take Required Minimum Distributions:

The total amount of your distribution is taxed as ordinary income (with the exception of nondeductible contributions).
When an account holder has made nondeductible contributions, distributions are a pro rata combination of deductible and nondeductible contributions (as well as earnings). The nondeductible contributions are not taxed. Note: If you have made nondeductible IRA contributions at any time, you must complete IRS Form 8606 to determine the taxable portion of any distribution you take.¹
Charles Schwab & Co., Inc. is required to report to the IRS whether an RMD is required with respect to your IRA(s). In addition, regulations require that we notify all IRA account holders of the amount of their RMD by January 31 of each year that an RMD is due. Remember, the responsibility for paying any taxes on your RMD rests with you, the account holder.

How Schwab can Help

Whether you plan to use your RMDs for living expenses or intend to reinvest them, Schwab can help. To explore your options with a Schwab representative, visit your nearest Schwab branch or call 800-435-4000 to schedule an appointment.

Here are just a few of the options you may want to consider:

Keep your money working for you

If you will not be using your distribution for living expenses, we can help you reinvest your money to keep it working for you.

One option is to deposit the cash or shares from your IRA directly into your brokerage account at Schwab.
If you are working and do not exceed certain income limits, another option is to consider contributing to a Roth IRA. Unlike Traditional IRAs, Roth IRAs do not require minimum distributions during your lifetime and do allow contributions if you are over age 70½. Check with your tax advisor to see if you qualify. (Please note that you cannot deposit your RMD directly into your Roth IRA; a separate check or transfer from a nonretirement account is required to make a contribution.)

Consolidate your accounts to make life easier

If you have IRAs at other financial institutions, consider consolidating them at Schwab. With all your retirement accounts at Schwab:

Managing your assets becomes more convenient.
It’s easier to calculate and schedule your Required Minimum Distributions on a regular basis. We can distribute your full RMD on the timetable you choose, as long as there are sufficient liquid funds in the account to do so.
Personal assistance is always available.

PLEASE READ THE IMPORTANT DISCLOSURES BELOW

1. More information on IRS Form 8606 is available online at www.irs.gov or by calling 1-800-TAX-FORM (1-800-829-3676).

This tax information is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends consultation with a qualified tax advisor, CPA, financial planner or investment manager.

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