Danielle,who is retired,reaches age 70 1/2 in 2015,and she will also be age 71 in 2015.She has a $150,000 balance in her traditional IRA.If her life expectancy is 15.3 years,what distribution,if any,must be made by April 1,2016?
A)$0
B)$9,804
C)$19,608
D)$150,000
E)None of the above

Question

Quizplus · Accepted Answer

Danielle is required to take a distribution by April 1, 2016, based on the Required Minimum Distribution (RMD) rules of the IRS. Her RMD for 2015 is calculated as the account balance on December 31, 2014, divided by her life expectancy factor of 15.3. This equals $150,000/15.3 = $9,804. Therefore, she must take a distribution of at least $9,804 by April 1, 2016, to avoid a penalty of 50% of the shortfall between the required amount and the actual distribution made. Option A is incorrect because she is required to take a distribution. Option C is incorrect because the RMD amount is less than her full account balance. Option D is incorrect because she cannot withdraw the entire account balance without penalty. Option E is incorrect because a distribution is required.

Danielle,who Is Retired,reaches Age 70 1/2 in 2015,and She Will