HERE'S A MILESTONE YOU DON'T REACH UNTIL YOUR SEVENTIES. The
major milestones of older Americans are not attended with the same
sense of wonder that accompanies the major milestones of younger
Americans. Sure, registering for Social Security benefits and signing up
for Medicare are rites of passage, but they don't hold a candle to
earning your driver's license, receiving your first kiss or earning your
first promotion.
If you have retirement accounts when you become a
septuagenarian, then you'll encounter a milestone the Internal Revenue
Service (IRS) strongly encourages you to remember. Beginning April 1
of the year following the year in which you reach age 70½, you must
begin taking required minimum distributions (RMDs) from most of your
retirement accounts. Forbes offered this list:
There currently are no RMDs for Roth IRAs, unless the accounts were inherited.
If you have more than one qualifying retirement account, then
a separate RMD must be calculated for each account. If you want to
withdraw a portion of each account, you can, but it may prove simpler to
take the entire amount due from a single account. Once you start, you
must take RMDs by December 31 every year. If you don't, you'll owe some hefty penalty taxes.
The IRS offers some instructions for calculating the RMD due.
"The required minimum distribution for any year is the account balance
as of the end of the immediately preceding calendar year divided by a
distribution period from the IRS' "Uniform Lifetime Table." A separate
table is used if the sole beneficiary is the owner's spouse who is ten
or more years younger than the owner."
If you need help figuring out the correct amount when RMDs are due, contact A.D. Financial Planning. |
Recent Articles >