IRA Rules

Posts Tagged ‘required’

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

Question: Can one continue contributions to a Traditional IRA past age 70.5 while collecting the RMD at the same time?

I reached age 70-1/2 last year and will collect my first IRA Required Minimum Distribution (RMD) this year. This may be an odd question but can I still make a maximum tax free IRA contribution this year? For me this year, the max is $6,000. OR is it that once you start receiving RMDs past your 70-1/2 birthday, one CANNOT make any more IRA contributions for the rest of their lives?

Answer: Great question! First, recent legislation suspended RMDs for 2009.

Next, you cannot contribute to a traditional IRA for the year in which you turn age 70 1/2, or older. You can, however, contribute to a Roth IRA. Your contribution limit for 2008 is: 100% of earned income, or $6,000 (includes $1,000 catch-up amount), whichever is less.

Hope that helps.

Disclaimer. The information above is for general purposes only and is not be be construed as tax, legal, or specific advice for any individual. Please consult with your professional advisors before you make any decisions regarding your finances.

In Service 401k Distributions to Roth IRAs by Pete Mitchell

Question: When withdrawing money from traditional IRAs for Required Minimum Distribution, Can I use only one Traditiona?

for Required Minimum Distribution, Can I use only one traditional IRA instead of all several traditional IRAs? Thank you very much for answering the question.

Answer: Yes, you may withdraw the entire RMD from a single IRA. You will have to let the other financial institutions know that is your plan, and you probably will have to sign some sort of waiver releasing them from any responsibility for not taking the RMD from the individual accounts.

12) How bad are IRA RMD penalties?