Although RMDs are outside my area of expertise, thoughts about beginning Social Security benefits at age 70 are often accompanied by musings about the need to do something about IRAs and other qualified retirement accumulations around age 70½. Recently I had occasion to help a Social Security client consider some of the issues related to the timing of his first RMD.

The basic rule is that you have to take your first RMD no later than April 1 of the year following the calendar year in which you turn 70½. This is sometimes called your Required Beginning Date (RBD).  The second RMD must be taken by December 31 of the calendar year that contains your RBD. Going forward, RMDs must be taken by December 31 in each subsequent year.

A person turns 70½ exactly 6 months to the day after their 70th birthday.  A lot depends on whether your date of birth is before July 1 or after June 30.

So let’s say you turned 70 on June 30, 2016. That means you will turn 70½ on December 30, 2016, and thus your RBD is April 1, 2017. You can take your age 70½ RMD as early as January 1, 2016 or as late as April 1, 2017, or at any time in between, but April 1, 2017 is the last date on which you can do it without incurring a 50% excise tax on the amount not distributed as required. The same rule applies if you turned 70 on any date from January 1 through June 29, 2016.

Meanwhile your childhood buddy Bill turned 70 on July 1, 2016. That means he will turn 70½ on January 1, 2017, and thus his RBD is April 1, 2018. Although he was born only 1 day after you were, his first RMD is not due until a full year after yours is due. He may take his age 70½ RMD as early as January 1, 2017 or as late as April 1, 2018, or at any time in between. The result would be the same if Bill turned 70 on any date from July 2 through December 31, 2016.

At first glance, waiting until the following April 1 may seem a no-brainer — an opportunity for several extra months of tax-deferred growth.  But whether we’re talking about you or your buddy Bill, both of you face potential income tax challenges if you defer taking your initial RMDs to the year following the calendar year in which you turn 70½.

In your case, if you delay taking your first RMD until 2017 you must also take your second RMD by December 31, 2017. Depending on the size of these required distributions and the amount of your other includible income, the double-dip in 2017 could mean that all or part of the second RMD might be subject to a higher marginal tax rate. In addition, the extra income in that one year might expose you and your spouse to a spike in Medicare Part B and D premiums a couple years down the road. See

The same applies to Bill: if he delays his first RMD until 2018, he will be required to take his second RMD in 2018 as well.

If you wish to avoid this trap, the solution is to take your initial RMD during the calendar year in which you turn 70½. In our examples, this means that you would take your RMD by December 31, 2016 and Bill would take his by December 31, 2017.

If you take the first RMD in 2016, that distribution will reduce the total value of your qualified accounts on December 31, 2016, which is the basis of your second RMD. But if you take the first RMD between January 1, 2017 and April 1, 2017, the value of your qualified accounts on December 31, 2016 will not have been reduced by the first RMD, and thus the second RMD will be somewhat larger than it would have been otherwise. [Bill has a similar situation, but his qualified accounts are valued on December 31, 2017.]

The foregoing is not intended to provide anything other than a heads-up about this particular RMD issue.  The IRS website provides a ton of information about RMDs, not all of which is easy to understand.  See, for example,

Although there may be circumstances under which it might be advantageous for you to delay your first RMD beyond the year in which you turn 70½, in the majority of cases this is more likely a trap than an opportunity. It’s yet another good reason to work with an experienced financial planner to help figure out what makes most sense for you.