Retirement Tip: 6 Rules of RMDs

Many people wait as long as possible to withdraw funds from tax-deferred retirement plans such as IRAs and 401(k)s in order to give their investments more time to grow. But the IRS won't let you postpone the income taxes indefinitely. Once you reach age 70?, you generally must begin taking required minimum distributions (RMDs) from these accounts each year. Here are some helpful things to keep in mind about RMDs:

1. Failure to take your RMD can result in a penalty equal to 50% of the required amount that was not withdrawn.
2. RMDs must start for the year you turn 70 ?, but you can wait until April 1 of the following year to take your first distribution.
3. Your RMD for the year must be taken before any account rollover (or Roth conversion) can be made.
4. If you are still working past 70, you can wait to take RMDs from your current employer’s 401(k).
5. Traditional IRAs, SEP IRAs and SIMPLE IRAs, can be aggregated--your RMD is calculated based on the total amount across all these accounts, but you can choose which to take it from.
6. Employer plans generally cannot be aggregated.

Need help coordinating your RMDs? Call me to set up an appointment today. 859-291-9879.