Required Minimum Distribution (RMD) Guide

The Internal Revenue Service (IRS) requires IRA owners to withdraw a minimum amount from their accounts annually starting the year they reach age 73.

Roth IRA owners are not required to take an RMD during their lifetime.

Deadline:

The deadline for taking RMDs each year is December 31. However, investors may delay taking their first RMD until April 1 of the calendar year after the year in which they turn 73. If the first RMD is delayed, a second RMD is required by December 31 of that same calendar year.

Client notification:

RMD amounts are provided on quarterly statements for investors age 73 and older with Capital Bank and Trust Company (CB&T) traditional IRAs, SIMPLE IRAs, SEP IRAs, SARSEP IRAs and 403(b)s (including Texas ORPs). In most cases, the RMD section will fall on page 2 or 3 of the statement. The RMD amount displayed on quarterly statements is calculated based on the IRS Uniform Lifetime Table, unless elected otherwise, using the account’s value as of December 31 of the prior year and the IRA owner’s date of birth. This table assumes the sole beneficiary of the account is not a spouse more than 10 years younger than the IRA owner. The actual RMD amount will differ if the sole beneficiary is the spouse and they are more than 10 years younger than the IRA owner.

Note: RMD amounts are not displayed on quarterly statements if the investor is turning 73 in 2026.

Courtesy reminder letters are sent in October to investors who reach RMD age in the current year and don’t have an automatic withdrawal plan on their account.

In addition to the letter, eligible investors are reminded about the RMD requirement on their quarterly statements.

Investors must determine their RMD amounts each year based on the appropriate IRS table. The IRA beneficiary designation determines which table they should use. RMD amounts are provided on quarterly statements for investors age 73 and older with CB&T traditional IRAs, SIMPLE IRAs, SEP IRAs, SARSEP IRAs and 403(b)s (including Texas ORPs). CB&T calculates the RMD amount using the IRS Uniform Lifetime Table, unless elected otherwise for the account, using the account’s value as of December 31 of the prior year and the IRA owner’s date of birth.

Note: RMD amounts are not displayed on quarterly statements if the investor is turning 73 in 2026.

Investors with multiple IRAs must calculate the RMD for each account separately. Once calculated, the total RMD amount of all IRAs can be combined and taken from one or more of the IRAs. RMDs from other types of retirement accounts (including 403(b)s, 457s, 401(k)s, money purchase pension plans and profit-sharing plans) are treated differently and cannot be combined and taken from your IRA.

CB&T can calculate the RMD amount, or for IRAs only, you can determine your client’s RMD amount using our RMD Planner™. Refer to How to calculate RMDs for IRAs for additional information.

If your client has an inherited IRA, CB&T is unable to complete these calculations. Contact a tax advisor for assistance with completing these calculations, and refer to IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) for information about determining RMDs for beneficiaries, including how to determine the applicable life expectancy factor and which age to use.

Investors are ultimately responsible for ensuring the calculated amounts are correct.

Investors have several options to take an RMD from their CB&T IRA.

One-time distribution:

Once you know the RMD amount, log in to Client Accounts and click Sell.

Automated RMDs:

If the client’s bank account information is on file, contact us to establish automatic RMD payments. Review Benefits of automated RMDs for more information.

If the client’s bank account information is not already on file, complete the Required Minimum Distribution (RMD) Request.

Charitable donation:

Investors can use their RMD to make a qualified charitable donation (QCD) by completing the IRA Qualified Charitable Distribution Request. A signature guarantee is required. Future distribution requests to the same organization and pay order will not require a signature guarantee if they are for $100,000 or less.

Federal and state withholding does not apply to QCDs, but they are still reported on Form 1099-R as normal distributions.

Reinvest the RMD:

Investors may reinvest their RMDs into a new or existing non-retirement account for themselves or another person. Your client must report any distributions from the IRA or retirement plan account as income for the taxable year in which the distribution was taken. Requests to move money to a new or existing non-retirement account for the same owner can be requested by phone or by using the Required Minimum Distribution (RMD) Request. A signature guarantee is required to move funds to another owner.

Note: Investors cannot roll their RMD into another tax-deferred IRA or retirement plan.

RMDs are generally fully taxable unless the IRA contained any nondeductible contributions. All RMDs are reported on Form 1099-R for the calendar year in which the distribution occurred.

For additional information on taxes, refer to the appropriate account type: traditional IRA, SIMPLE IRA, SEP IRA or 403(b) Basic.

Penalty for missed RMD:

During a calendar year, if an investor distributes less than the RMD, the difference not taken is known as an excess accumulation. The excess accumulation is subject to a tax penalty of 25%. For more information about excess accumulations, refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).