Did you turn age 70 ½ during 2015? If so, HAPPY HALF BIRTHDAY!!!!! You don’t look a day older in our opinion. But along with being wiser (and probably better looking and more relaxed) comes yet another responsibility.
For IRAs, by April 15th of the year following the year you turned 70 ½, you MUST take a REQUIRED MINIMUM DISTRIBUTION from your IRA, Simple IRA or SEP IRA. For retirement plans, see below. You must do this each subsequent year.
- The GOOD NEWS? You can withdraw a larger amount than the required minimum. Finally, you get to use that hard earned cash!
- The BAD NEWS? If you DON’T take the distribution, there is a penalty of 50%, YES, FIFTY PERCENT, of the amount that should have been distributed.
For Employer Plans: 401(k), profit-sharing, 403(b) or other defined contribution plans, you must take the distribution by April 1 of the year following the later of: (a) the year you retire or (b) you turn 70 ½.
For each subsequent year the distribution must be taken by December 31st.
For more info on this, courtesy of the IRS, click here.
For a quick look of the RMD Comparison Chart for IRAs vs. Employer Retirement Plans, click here.
For the worksheets to determine the amount of the required distribution, click here.