~You cannot keep retirement funds in your account indefinitely. Individuals are generally required to begin lifetime withdrawals from a Traditional IRA or retirement plan account upon reaching age 70½. These withdrawals are called Required Minimum Distributions, often referred to as RMDs, and represent the minimum amount that the US federal government requires you to withdraw annually from your traditional IRA and employer-sponsored retirement plans.
If you participate in a defined-contribution plan, including 401(k)s and 403(b)s, you can put off taking RMDs if you’re still working. This is the case unless your specific plan’s rules require earlier, age-based RMDs or you own 5 percent or more of the company that runs the defined-contribution plan. Roth IRA’s do not require withdrawals until after the death of the owner.
The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” (A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.) Withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
RMD rules are complex, and failure to take a RMD in any given year can result in steep tax penalties. For more information pertaining to your situation please call or email us. If you need retirement income advice, please don't hesitate to contact Hinton-McCurry, your Atlanta Retirement Planning specialists.
