Required Minimum Distribution (RMD)
RMD refers to the minimum amount a client must withdraw annually from their tax deferred account once the owner turns 70.5.
RMD is calculated automatically within inStream and is distributed at the start of the year before any income and contributions are made.
RMD is based on the owner's tax deferred account balance at the start of the year as well as the owner's age.
If owner's birthday is before June 30th, RMD will begin when the owner turns 70. If owner's birthday is after June 30th, RMD will begin when they turn 71.
Excess Income on RMD
Excess Income on RMD refers to the RMD net of income tax. It is the cash amount a client will actually receive.
Excess Income on RMD(t) = RMD(t) * (1 - Income Tax Rate)
Tax on RMD (Taxed at Income Tax Rate)
Tax on RMD refers to the amount of taxes a client must pay in regards to their RMD.
Tax on RMD(t) = RMD(t) * Income Tax Rate