What is the minimum required distribution for an individual with a traditional IRA balance of $410,000 and a distribution period of 22.9?

What is the minimum required distribution for an individual with a traditional IRA balance of $410,000 and a distribution period of 22.9?

• A. $3,500
• B. $5,600
• C. $13,657
• D. $17,904

Answer: (D)

To determine the minimum required distribution (MRD) for an individual with a traditional IRA, the balance in the account is divided by the distribution period, which is based on the IRS life expectancy tables. In this scenario, the account balance is $410,000 and the distribution period is 22.9 years. To calculate the MRD, the formula is as follows: \[ \text{MRD} = \frac{\text{IRA Balance}}{\text{Distribution Period}} \] Plugging in the values: \[ \text{MRD} = \frac{410,000}{22.9} \] Calculating this gives: \[ \text{MRD} = 17,904.38 \] Since the MRD is typically rounded to the nearest dollar, it results in $17,904. This answer reflects the requirement set by the IRS for individuals to withdraw a certain amount from their traditional IRAs once they reach a specific age, ensuring that they begin to pay taxes on their retirement savings. Correctly calculating this figure is crucial for tax compliance and financial planning, particularly for individuals nearing or in retirement.

To determine the minimum required distribution (MRD) for an individual with a traditional IRA, the balance in the account is divided by the distribution period, which is based on the IRS life expectancy tables. In this scenario, the account balance is $410,000 and the distribution period is 22.9 years.

To calculate the MRD, the formula is as follows:

[ \text{MRD} = \frac{\text{IRA Balance}}{\text{Distribution Period}} ]

Plugging in the values:

[ \text{MRD} = \frac{410,000}{22.9} ]

Calculating this gives:

[ \text{MRD} = 17,904.38 ]

Since the MRD is typically rounded to the nearest dollar, it results in $17,904.

This answer reflects the requirement set by the IRS for individuals to withdraw a certain amount from their traditional IRAs once they reach a specific age, ensuring that they begin to pay taxes on their retirement savings. Correctly calculating this figure is crucial for tax compliance and financial planning, particularly for individuals nearing or in retirement.