News / Article

Mandatory IRA Distributions: Avoid These 3 Common Mistakes

Source: forbes.com - Dec 12, 2016

It's hard to break a habit after 30 or 40 years isn't it? Well, if you've been contributing to an IRA, 401K, 403B, or TSP you've created a multi-decade healthy habit of saving, but when you turn 70 1/2 or older, it's time to break that habit. Think of it as a IRA contribution cessation program compliments of the IRS.

RMDs (Required Minimum Distributions) are mandatory upon reaching age 70 1/2. At this age, and for the rest of your life, you have to start withdrawing money from your IRAs, etc. each year and pay income tax on it. While this sounds simple on the surface, it's actually pretty convoluted because the math (minimum amount required) changes each year and if you make a mistake IRS penalties can be as high as 50%.

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Category: General Business