IRA Required Minimum Distributions (RMDs): What You Need to Know

Mar 15, 2026

IRA Required Minimum Distributions (RMDs): What You Need to Know

If you own an Individual Retirement Account (IRA), you may have annual tax obligations related to Required Minimum Distributions (RMDs).

Many taxpayers assume that the bank or investment firm automatically handles these requirements. In reality, the responsibility ultimately rests with the taxpayer.

This page explains when RMDs may apply and what information we may need from you when preparing your tax return.

For more background and details, see this article: Required Minimum Distributions (RMDs) – What U.S. Expats in Israel Need to Know - Cole & Waxman Tax Services

What Is a Required Minimum Distribution?

Under U.S. tax law, IRA owners and certain IRA beneficiaries must withdraw a minimum amount each year from retirement accounts once they reach the applicable starting age, or after inheriting an IRA.

These withdrawals are called Required Minimum Distributions (RMDs).

If the required amount is not withdrawn by the applicable deadline, the IRS may impose a penalty on the shortfall.

Under current law:

  • The penalty is generally 25% of the amount that should have been withdrawn, and
  • It may be reduced to 10% if the error is corrected promptly.

Your Responsibility

It is the taxpayer’s responsibility to determine:

  • Whether an RMD is required for the current year, and
  • Whether the correct amount has been withdrawn by the deadline.

Financial institutions may provide estimates, but they do not always calculate the correct amount, particularly when multiple accounts or inherited IRAs are involved.

Traditional, SEP, and SIMPLE IRAs

Owners of Traditional, SEP, and SIMPLE IRAs generally must begin taking RMDs once they reach the required age under current law.

To determine whether an RMD is required and how much must be withdrawn, we may need the following information:

  • Confirmation of whether you reached RMD age during the tax year
  • The December 31 balance of each IRA from the prior year
  • The total distributions taken during the current year

If you would like our assistance calculating your RMD, please provide:

  • IRA statements showing December 31 year-end balances for the prior year
  • Distribution confirmations for the current year
  • Note - this is outside the scope of the standard tax preparation agreement. Your tax accountant will let you know what fees apply for this additional service.

Inherited IRAs

Inherited IRAs are subject to special distribution rules, and these rules vary depending on several factors, including:

  • Whether the original IRA owner died before or after their Required Beginning Date
  • Your relationship to the deceased
  • Whether you qualify as an Eligible Designated Beneficiary

For inherited IRAs, please provide the following information:

  • Date of birth of the original IRA owner
  • Date of death
  • Your relationship to the deceased
  • December 31 account balances for each year
  • Distributions taken during the year

Failure to comply with inherited IRA distribution rules may also result in penalties.

Note - this is outside the scope of the standard tax preparation agreement. Your tax accountant will let you know what fees apply for this additional service.

Roth IRAs

Roth IRA owners generally do not have lifetime RMD requirements.

However, beneficiaries of inherited Roth IRAs may still be required to take distributions.

Additional IRS Guidance

The IRS provides detailed information on Required Minimum Distributions here:

IRS Required Minimum Distribution FAQs
https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs

Disclaimer

Service
Our preparation of your tax return does not automatically include monitoring or calculating your RMD obligations.

If you would like our assistance reviewing or calculating your RMD requirements, please submit the relevant IRA statements and notify our office.

Educational Disclaimer

The information on this page is provided for general educational and informational purposes only. It is not intended as tax, legal, or financial advice and should not be relied upon as a substitute for advice from a qualified professional.

Tax rules relating to retirement accounts can be complex and depend on each taxpayer’s specific circumstances. You should consult your personal tax advisor or accountant for guidance regarding your individual situation.

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Many taxpayers receive identity verification notices from the IRS, and in most cases, the process is straightforward and can be resolved without much difficulty.

You have the following options to verify your identity:

Option 1: Verify through the IRS using your ID.Me account

 

Option 2: Use the IRS Document Upload Tool

    • Please note when they ask for the access code answer "no" and put in the notice/letter type 5447C

    • Alternatively, we can upload the documents on your behalf. (Please note additional fees apply.)

For both options 1 and 2:

    1. Allow at least 30 days to process.
    2. You can then check your status on IRS Where's My Refund or request that we pull your transcript.

    Option 3: Call the IRS

      1. Phone number: 1-267-941-1083

      1. When calling the IRS please note that there could be long wait times. We recommend the best time to call is as close to 1PM Israel time as possible, when the lines first open.

    When speaking with the IRS agent:

      • Let them know you are calling in response to a Letter 5447C letter for tax year 202x.

      • Provide the control number as it appears on the first page of the letter.

      • Be prepared to answer any question they ask from the first 2 pages on both tax returns, including:

          • complete address

          • filing status (Head of Household /Married Filing Separately / Married Filing Joint/ Single)

          • refund amount.

      • If you are unsure of an answer you may ask the agent where it can be found on the return.

      • Know the dates of birth for you and the children on the return

      • Know your mother's maiden name

      • If they ask about W-2 income, tell them since you live outside of the US your income isn’t reported on a W-2, but rather the equivalent form 106 instead.

    They hopefully will not ask any more financial questions.

    If your identity is successfully verified during the call, the IRS will typically inform you immediately. Your refund should then be released within approximately 6-9 weeks.

    Documents Required in All Cases

    Regardless of the verification method you choose, you will need:

      • a copy of the 5447C letter you received

      • the first 2 actual 1040 pages of your 202x and 202x tax returns

    Additional Documents for ID.me or Document Upload Verification

    If you are verifying online through ID.me or using the IRS Document Upload Tool, you will also need:

    Two clear copies of acceptable identification, as listed in the IRS letter (for example passport and license).