February 2, 2010
Calculating Your Required Minimum Distribution for 2010
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Categories: Current Events, Retirement, Financial Planning, Tax Planning, Year End Planning
Required Minimum Distribution Calculation (RMD ATTACHMENT)
For 2010 owners of IRA’s and other retirement accounts who reach age 70 ½ or older are again obligated to take their required minimum distribution (RMD). The RMD was temporarily halted for 2009. Many are struggling with the calculation for 2010. The attached document above explains how to calculate your RMD for 2010. Remember that the RMD does not apply to ROTH IRA’s. This is one reason people are considering a ROTH conversion (see related blog entry, http://www.deleonandstang.com/my-two-cents/article/does-the-2010-roth-conversion-make-sense-for-you/, http://www.deleonandstang.com/my-two-cents/article/2010-roth-ira-conversion/ )
As far as how to take the RMD you have multiple options. You can take it periodically (monthly) throughout the year. You can take the entire amount out at any time during the year. You also do not have to actually sell the assets you can move them "in-kind" from an IRA account to a non-retirement account. The RMD is a calculation based on all retirement accounts however if you have multiple retirement accounts the entire RMD can come from one account. It does not have to be taken out proportionately from each account. Regardless of how you choose to take your RMD you want to be sure that you do it by 12/31 (one time exception of 4/1 for the year you turn 70 ½). If you do not take your RMD the IRS will penalize you. The penalty is a hefty one at 50% of what your RMD amount should have been. You will still be required to take your RMD as well. Lastly please remember this is a required minimum distribution, you can always take more. The distribution will be taxed as ordinary income so you should seek tax advice before taking any distributions from a retirement account. As always you can reach me .(JavaScript must be enabled to view this email address) with any questions.
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