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Lifetime Required Minimum Distributions from Traditional IRAs for Clients Age 70 and Above

As you approach your 70th birthday, you should be aware that you must begin taking minimum annual distributions from your traditional IRAs no later than April 1 following the year in which you reach age 70-1/2.

The tax rules require minimum annual distributions to be made to help assure that IRAs are used primarily to provide for retirement, rather than as a family tax shelter.

Fortunately, the latest IRS regulations favor the IRA owner who wants to make the smallest possible withdrawal each year. For example, applying the rules that are used by most IRA owners, if you reach age 70-1/2 during 2004 and your 71st birthday falls within 2004, then:

Minimum annual distributions are smaller if your spouse is the sole designated beneficiary of your IRA, and he or she is more than ten years younger than you.

Complications may arise if you have multiple IRAs. For example, the minimum distribution is calculated separately for each IRA, but the total minimum distribution for all of them may be paid out from one IRA or from a combination of IRAs. And you could be hit with a 50% penalty tax if you don't withdraw the required minimum amounts.

Call and make an appointment so that we may review how the minimum distribution rules affect your retirement, estate, and financial plans.

Posted: February 2006

In need of accounting services? Please contact our office to talk to one of our professionals about your accounting needs and how we may be of service.

Bassman, Laserow, Adelman & Weiss, PC
630 Sentry Parkway East, Suite 200
Blue Bell, PA 19422
voice: 215-628-0420
fax: 215-628-3461
email: Bassman, Laserow
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