IRA Rules

Question: When must I take my first minimum required distribution?

On September 8, 2008, I will be 70.5 years old. I hear when you reach 70.5 you MUST start taking a minimum amount from a traditional IRA.

My wife is 21 years younger than me, does that mean my MRD will be lower? Our Joint Life Expectancy is 35.9.

When can take my MRD and not be penalized. I read somewhere the penalty can be up to 50% of the MRD?
For example, if I have a $20,000 traditional IRA and our “Joint Life Expectancy” is 35.9 I will have to withdraw $20,000/35.9 = $557. Is this correct? Please advise if I’m using the right numbers.

Answer: You must take your 2008 RMD by 4/1/09 but then you’ll have to take 2009’s RMD by 12/31/09, putting two years’ RMDs in one year. Therefore, it is often advantageous to go ahead and take your 2008 RMD by the end of this year. In fact, it may be wise to do so soon as the companies get so many demands in the last couple of months that things can get messed up and/or delayed.

If will be advantageous to elect the joint provision, which you are already aware of.

You are correct that the penalty for failing to meet the RMD is 50%.

Stocks, Mutual Funds & Retirement Investments : IRA Required Minimum Distribution

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