Required Minimum Distribution (RMD)
Definition
A Required Minimum Distribution (RMD) is the amount the IRS requires you to withdraw each year from a traditional IRA or similar retirement account once you reach the qualifying age. The withdrawal is mandatory and is generally taxed as ordinary income.
RMDs apply to most pre-tax retirement accounts, including a traditional precious-metals IRA, and they create specific complications when the account holds physical metal rather than cash.
Why it matters
Once you reach the IRS RMD age, you must withdraw at least the calculated minimum each year. Missing an RMD can trigger a steep penalty on the amount you failed to take. The required figure is based on your prior year-end account balance and an IRS life-expectancy factor.
In practice
With a metals IRA, you can satisfy an RMD in two ways. You can sell enough metal inside the account to raise cash and withdraw that cash, or you can take an in-kind distribution, having actual coins or bars shipped to you. In-kind distributions raise questions of valuation and shipping, since the metal must be valued accurately for tax purposes on the distribution date.
Common confusion
Roth IRAs do not require lifetime RMDs for the original owner, so the rule mainly affects traditional accounts. The RMD age has changed under recent legislation, so confirm the current age that applies to your situation before assuming a fixed number.