You may be approaching an important
deadline if you have retirement accounts and you turned 70½ last year.
Generally, you must begin withdrawing money from tax-favored retirement plans
in the year you turn 70½. However, you may postpone your first withdrawal until April 1
of the year after you turn 70½. That means you
have until April 1, 2015, to complete your required 2014 distribution.
The minimum distribution rules don't apply
to your Roth IRA accounts. And if you are still working at age 70½, you are
generally not required to withdraw funds from a qualified employer-sponsored
plan until April 1 of the calendar year following your actual retirement.
If you postponed your first distribution,
you must take two distributions this year – one for 2014 and one for 2015. Your
2014 distribution must be completed by April 1, while your 2015 distribution
must be completed by December 31, 2015. After that, you must take a
distribution by December 31 each year until your retirement funds are depleted.
Generally,
the amount of the RMD for any year is based on your age. You take the balance
in all your traditional IRAs as of the last day of the previous year, and
divide by a factor representing your life expectancy. The IRS has published a
standard life expectancy table to use in the calculation. Special rules might
apply if your spouse is more than ten years younger than you are and is the
sole beneficiary of your IRA.
Make sure you notify the holder of your
retirement account in time to complete your distribution. Follow up to ensure
that the transaction will be completed on time. You may withdraw more than the
required amount, but if you fail to take at least the minimum distribution on
time, you are subject to a 50% penalty tax.
Don't overlook this important distribution
deadline. Call our office if you would like assistance in planning your
retirement withdrawals.
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