Belmont Village Quarterly Newsletter
on Senior Living

Taxing Issues: Understanding Required Minimum Distribution

Tax time is upon us and with that comes a myriad of regulations and requirements.  Trying to keep up with them all can be dizzying, and as you pass certain age milestones, you may fall under regulations that did not affect you previously.  One such example is Required Minimum Distribution.

Beginning the calendar year following the year you turn 70-1⁄2, you’re generally required by the IRS to withdraw a minimum amount of money from your Individual Retirement Account (IRA) each year. This amount is called a Required Minimum Distribution, or RMD. Note that you can always take more than the RMD amount.

RMDs typically must be taken from any IRA in which you contributed tax-deferred assets or had tax-deferred earnings. These accounts include:

    * Traditional IRAs
    * Rollover IRAs
    * SIMPLE IRAs
    * SEP-IRAs
    * Most Keogh accounts
    * Most 401(k) and 403(b) plans

The only exception to this requirement is a Roth IRA. You are not required to take RMDs from a Roth IRA during your lifetime, nor can you satisfy your RMD requirement with a withdrawal from a Roth IRA. Also,
if you continue to work beyond age 70-1⁄2, and do not own more than 5% of the business you work for, you may be able to defer taking distributions from your current employer's Keogh, 401(k), 403(b), or other employer-sponsored retirement plan until April 1 of the calendar year following the year in which you retire.

The purpose of this article is to provide information only.  It is not intended to be tax advice.  IRS rules and regulations can be complicated and difficult to understand.  Belmont Village recommends that you consult your tax advisor to learn more about required minimum distributions and how they affect you.

For More Information:

http://www.irs.gov/retirement/article/0,,id=96989,00.html