Unless you have a self-directed Roth IRA/Roth IRA LLC, you are required to commence making distributions from your self-directed IRA/ IRA LLC once you reach age 73.
The required distribution amount is called a minimum distribution (RMD).
Self-directed Roth IRAs do not require withdrawals until after the death of the owner.
Required Minimum Distribution (RMD) Defined
Required minimum distributions (RMDs) are the minimum amounts you must withdraw from your non Roth IRAs each year. You generally must start taking withdrawals from your traditional IRA, SEP IRA, and SIMPLE IRA accounts when you reach age 73.
The Required Minimum Distribution (RMD) Deadline
Once you reach age 73, the deadline for taking a required minimum distribution (RMD) from your self-directed IRA/ IRA LLC is December 31 each year. However, you can delay taking the first RMD until April 1 of the following year. For example, if you reach age 73 in 2024, your first RMD is due by April 1, 2025, and the second RMD is due by December 31, 2025.
If a required minimum distribution (RMD) is not taken by the annual deadline, it could result in an IRS penalty equal to 25% of the amount not taken on time.
Still Working Required Minimum Distributions (RMDs)
Confusion exists with respect to still having to make RMDs from your self-directed Roth IRA/Roth IRA LLC as well as your pretax self-directed solo 401k even if you are still working past age 73. The exception to being able to delay RMDs past age 73 if you are still working only applies to full-time employer plans such as traditional 401k plans and 403(b) plans, for example, where you are not a more than 5% owner.
Calculating required minimum distribution (RMD) from a self-directed IRA/ IRA LLC
A RMD is calculated for each IRA by dividing the prior December 31 balance of that IRA by a life expectancy factor that the IRS publishes in Tables in Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). Most IRA holders use the IRS Uniform Lifetime Table. However, use the IRS Joint Life and Last Survivor Expectancy Table if the sole beneficiary of the account is your spouse and your spouse is more than 10 years younger than you.
Required Minimum Distributions (RMDs) from Just One IRA
While the RMD calculation applies separately for each self-directed IRA/ IRA LLC as well as other IRAs (SIMPLE and SEP), the total RMD may be distributed from just one IRA.
However, RMS from traditional 401k plans including the self-directed solo 401k for the self-employed must be calculated separately for each plan and taken individually from those plans.
Distribute More Than the Required RMD Amount
While each year you may distribute more than the required RMD amount, doing so does not result in not having to take an RMD the following year or in future years. What is more, other distribution amounts such as from Roth IRAs. which are not subject to RMDs, may not be used towards satisfying your RMDs requirements from your
self-directed IRA/ IRA LLC as well as other IRAs (SIMPLE and SEP).
Lower Taxable Income Resulting from Required Minimum Distributions (RMDs)
RMDs are taxed at ordinary income tax rates which may push you into a higher tax bracket, for example. As a result and from a tax planning perspective, consider donating your required minimum distribution (RMD) to charity using the qualified charitable distribution (QCD) strategy by having the self-directed IRA/ IRA LLC custodian process the RMD amount directly an eligible 501(c)(3) charitable organization.
