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.
The required minimum distribution is calculated each year by taking the balance in all you IRA accounts and dividing this by your life expectancy, based on actuarial table published by the IRS. The percentage starts out fairly low and increases incrementally each subsequent year.
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.
Updated: June 2018
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Blue Bell, PA 19422
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