IRA Distribution

RMD’s- Required Minimum Distributions

Avoid the penalties

Required minimum distributions are a necessary evil of retirement plans, such as 401(k) plans, 403(b) plans, 457(b) plans, and traditional IRAs, SEP, and SIMPLE plans. A Roth IRA is the only retirement vehicle that does not require you to take money from the account when you reach certain age.

Generally speaking you must annually withdraw a minimum amount from your plan in the year you reach 70 ½. There is an exception for withdrawals from 401(k), 403(b) or 457(b) plans if you are still employed and contributing to the plan. This exception does not apply to any IRA plans (Roth excepted) regardless of your employment status. You must calculate a required minimum from each of the plans that you have and make arrangements accordingly to have it distributed. You, the plan participant, are responsible for taking the correct amount or face a 50% penalty. That’s 50% of the amount you should have taken going right back to the government. You have worked too hard to earn and save that money to let it end up in the hands of Uncle Sam.