The fair market value, or FMV, of an IRA is the actual monetary value of the assets in an IRA. The term "fair market value" is typically used for a fair market value statement at the end of a calendar year. Most IRA companies will send out a statement at the end of the year and list the fair market value for that previous year.
The fair market value is a number that is very important for individuals who are planning for retirement. When dealing with an IRA, you have a required minimum distribution that you have to take once you reach the age of 70 1/2. The required minimum distribution is calculated based on the fair market value of your IRA. Your required minimum distribution will be calculated on the fair market value from the previous year on your statement.
Planning the Distribution
At the beginning of the year, the IRA company will send you a document that reminds you of your required minimum distribution. Sometimes, they will calculate the minimum distribution and include the number with this statement. When you are trying to determine how much money to take out of your retirement account, it is helpful to know the fair market value.