RETIREMENT & IRAs TAKE PLANNING

Premature distributions:

If you are under age 591/2, be extremely careful about drawing money from your IRA. A federal penalty of 10% applies to certain premature distributions; some states also assess a penalty. However, there are safe methods of withdrawing IRA funds before age 59 1/2. For example, withdrawals of substantially equal periodic payments based on your life expectancy (or the lives of you and a beneficiary) may prevent the IRS from assessing the penalty.

Minimum distributions:

You will only be able to contribute to an IRA as long as you receive compensation and you are J under age 70 1/2. At age 70 1/2, you must begin taking at least minimum distributions from your account; otherwise the IRS can assess a penalty. Your minimum required distribution (MRD) is determined by using the MDIB annuity table factor based upon your age. If your spouse is your beneficiary and is at least 10 years younger, you may use the Joint Life & Last Survivor Table. To determine the minimum distribution amount, divide the balance of your IRA account on Dec. 31st of the prior year by the factor from the appropriate annuity table. If you have multiple IRA accounts they are all treated as one for the purposes of this computation.

Choosing a beneficiary:

A beneficiary is someone you choose to receive your IRA in the event of your death. You may choose your spouse, your child(ren), a friend, etc. Choosing a beneficiary also plays a big part in how the IRA is distributed at your death. Be sure to consider the choice carefully before making a final decision.

Return to Tax Considerations for Retirees

Social Security and Your Retirement

Pension Plan Distributions

Sale of Home & Moving

Paying Your Taxes