Mr. T: "I Pity the Fool Who Misses Their RMD"
Laurence Tureaud, born May 21, 1952, is better known as Mr. T. He is an actor and a retired professional wrestler. He is famous for his roles as B. A. Baracus in the 1980s television series “The A-Team” and as boxer Clubber Lang in the 1982 film Rocky III. Time catches up with all of us, and this year Mr. T is celebrating his 73rd birthday. That means it is now time for him to take required minimum distributions (RMDs) from his IRA. Here are five easy steps Mr. T can take to make sure he gets his first RMD right.
Step 1. Determine the distribution year
Mr. T turned age 73 back in May, so the RMD we are calculating is his 2025 RMD. This is his first RMD, so he will have until April 1, 2026, to take it. Every year thereafter he will need to take his RMD by December 31. So, Mr. T could delay his 2025 RMD until next year, but if he does that, he will need to take two RMDs in 2026.
Step 2. Find the IRA balance
To calculate Mr. T’s 2025 RMD, we will need to know his December 31, 2024, balance. This is the balance that is used even if Mr. T waits until sometime in 2026 (by April 1) to take his 2025 RMD. We will need to adjust this 12/31 balance for any outstanding rollovers or transfers.
Step 3. Look up the life expectancy factor
To determine the RMD, we will need a life expectancy factor. Most IRA owners will use a factor from the Uniform Lifetime Table. We will simply take Mr. T’s age (73) and find the factor that corresponds (26.5). Those who have named a spouse who is more than ten years younger as their sole beneficiary may use the Joint Life Expectancy Table.
Step 4. Divide the account balance by the life expectancy factor
The next step is doing the math. We simply divide the December 31, 2024, balance of the IRA by the life expectancy factor (26.5).
Step 5. Take the RMD
The final step is making sure the RMD is taken by the deadline. If the RMD is missed there is a 25% penalty. Mr. T should be sure to take his 2025 RMD by April 1, 2026, to avoid any penalties. “I pity the fool” who misses this date.
By Sarah Brenner, JD
Director of Retirement Education
Ed Slott and Company, LLC
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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.