ARTICLE TAKEAWAYS
Capital Group offers a number of tools you can access to help your clients understand, calculate and process RMDs from their traditional, SEP, SARSEP, SIMPLE IRAs and SIMPLE IRA Plus plans.
These include the:
RMDs are calculated by dividing the IRA’s prior year-end balance by the applicable life expectancy factor from the IRS uniform lifetime table. The formula uses the life expectancy factor corresponding to the age your client will turn that year.
Sample RMD calculation:
Each year, your client will use a different factor from the IRS Uniform Lifetime Table based on their age. If your client wishes to set up an automatic withdrawal plan from their Capital Bank and Trust Company IRA, we'll calculate the RMD for them each year. This can be indicated on the Required Minimum Distribution (RMD) Request.
If the client’s bank information is on file, contact us to establish automatic RMD payments. Review Benefits of automated RMDs for more information.
Sole beneficiary is a spouse at least 10 years younger than the IRA owner
If your client’s sole beneficiary is a spouse at least 10 years their junior, you can use the factor from the IRS Joint Life and Last Survivor Expectancy table in the applicable IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) — making the RMDs smaller and leaving more money in the account.
In the event of a divorce or the younger spouse’s death, the actual joint life expectancy may still be used for that year. The following year, the IRA owner’s life expectancy from the IRS uniform lifetime table must be used.
Multiple IRAs
If the client owns several IRAs, the RMD must be calculated separately for each IRA. The client may combine the amounts and take the distribution from one or more of the IRAs.
Inherited IRAs
If you need to calculate the RMD on an inherited IRA, refer to Required Minimum Distributions for IRA Beneficiaries on the IRS website for additional information and the corresponding life expectancy tables.
For financial professionals only. Not for use with the public.
All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company or fund. All other company and product names mentioned are the property of their respective companies.
Use of this website is intended for U.S. residents only.
The guidelines and procedures provided in the Account Resource Center may not apply to networked accounts or accounts not directly held by American Funds. The guidelines and procedures provided also apply only to those retirement accounts or Coverdell ESAs invested in American Funds with Capital Bank and Trust Company (CB&T) as custodian. The guidelines and procedures provided in the Account Resource Center do not apply to plans held in our retirement plan solutions — PlanPremier, PlanPremier-TPA or RecordkeeperDirect. Information on the Account Resource Center may change periodically, and previously printed information may not be current. Please refer to capitalgroup.com for the most current information available.
Financial professionals should always contact their back office to determine if there are any restrictions on the use of American Funds products, tools, services, websites and literature.