The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs

We study the effects of Required Minimum Distribution (RMD) rules on the asset decumulation behavior of retirees with Traditional Individual Retirement Arrangements (IRAs). Using a nationally representative panel of 1.8 million IRA holders from 2000 to 2013, we estimate that around 50 percent of individuals would prefer to withdraw less than their required minimum. However, we also estimate that up to 38 percent of these RMD-constrained individuals did not respond to a temporary suspension of RMD rules in 2009.

The online appendix for this paper may be found at https://papers.ssrn.com/abstract=2859088.

Keywords: Asset decumulation, income taxation, Individual Retirement Accounts, investment, required minimum distributions, retirement

JEL Classification: D14, H24

Suggested Citation: Suggested Citation

Mortenson, Jacob and Schramm, Heidi and Whitten, Andrew, The Effects of Required Minimum Distribution Rules on Withdrawals from Traditional IRAs (July 2019). Available at SSRN: https://ssrn.com/abstract=2764435 or http://dx.doi.org/10.2139/ssrn.2764435