If you are age 70 1/2, Don’t forget to take out your RMDs for 2010 from your IRAs before 12/31/10!
Required Minimum Distributions (RMDs) generally are minimum amounts that an IRA or a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires.
The RMD rules apply to all employer sponsored retirement plans, including profit-sharing plan, 401(k) plans, 403(b) plans and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs and SIMPLE IRAs.
An account owner must take the first RMD for the year in which he or she turns 70 ½. However, the first RMD payment can be delayed until April 1st of the year following the year in which he or she turns 70 ½. For all subsequent years including the year in which the first RMD was paid by April 1st, the account owner must take the RMD by December 31st of the year. Consult us for any assistance regarding which year to take your RMD.
There is a stiff penalty if an account owner fails to withdraw a RMD. The amount not withdrawn is taxed at 50%. So make sure that you don’t miss this deadline.
Call us if you need help with Required Minimum Distribution tax rules.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
