A client's first RMD should be taken by Dec. 31 of the year he turns 70½. However, the date he must begin RMDs is generally April 1 of the year after he turns 70½. If he turns 70½ at any time in 2007, for instance, his RBD is April 1, 2008. If he waits until 2008 to take that first RMD, though, he also has to take a second RMD by Dec. 31, 2008. For most taxpayers it doesn't make sense to double up on the distribution in one year.

There are two exceptions to the April 1 RBD rule: the still-working exception and the old-money exception for 403(b)s.

Still-working exception. For clients who have 401(k)s or other employer plans (not IRAs, SEPs or SIMPLEs), the RBD is the same April 1 date as for IRA owners, unless they are still working for the company where they have the plan. If they don't own more than 5% of the company, they can delay their RBD to April 1 of the calendar year after the year they retire. This is sometimes called the still working exception to the RBD.

Old money exception for 403(b)s. Old money is not from J. Paul Getty. It is 403(b) plan money contributed before 1987. Required distributions on the balance of a client's 403(b) plan on Dec. 31, 1986, can be delayed until age 75. The client must have a cut-off balance clearly showing the Dec. 31, 1986, balance—which most plans will have readily available-or it may even be on the current statement. The remaining 403(b) account balance (post-1986 money) must still follow the regular age 70½ IRA distribution rules.

Courtesy of FinancialPlanning.com