Investments & Financial Planning
Is there a Required minimum distribution from my retirement account ?
The Required minimum distribution is the amount you are required to withdraw from your tax-deferred retirement savings accounts after you turn 70 and a half. You must take your first minimum distribution by April 1 of the calendar year following the year in which you turn 70 and a half. You must take your second distribution by December 31 of that same year, and subsequent distributions each year by December 31. If you do not make these withdrawals, you will have to pay a 50 percent penalty tax. There is an exception in the case of a 401(k)retirement plan if you are still working for the company sponsoring the plan, and if you own less than 5% of the company. Your distribution amount is determined by your life expectancy using an IRS-approved mortality table and the amount of money you have in your account, a interest rate and, in certain cases, the life expectancy of your beneficiary. There are several IRS-approved methods for calculating the Required minimum distribution. Speak to your local CPA about the different methods.
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