ASK KIM


When to Take Required IRA Distributions

Kimberly Lankford

Once you reach a certain age, you have to withdraw money from your account or face a penalty.



I will be turning age 70½ this year. Do I have to take my first IRA distribution in 2008 or in 2009? Everything that we have read indicates no minimum distribution is required this year. Does that mean I will need to take two distributions next year?

You're exactly right. You don't need to take your first required minimum distribution until April 1 of the year after the year you turn age 70½. For you, that means April 1, 2009.

But you'll also need to take the following year's distribution -- for age 71 -- by December 31 of that year, too.

To calculate how much money you need to withdraw each year, add up the balance of all your traditional IRA accounts as of December 31 of the previous year and divide it by the life expectancy numbers you'll find in the IRS tables for someone your age. For your first withdrawal (age 70), that's the balance as of December 31, 2007, even though you have until April 1, 2009, to take out the money.

See the tables at the end of IRS Publication 590 for the divisors or run your numbers through our required minimum distribution calculator.

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After you calculate your required withdrawal for the year, you can take it from whichever traditional IRA account you want. If you have several IRAs, you don't have to withdraw a certain amount from each one.

If you don't take out the minimum required each year, you will have to pay a penalty of 50% of the amount you failed to withdraw.

Required minimum distribution rules do not apply to Roth IRAs. Distributions from Roth IRAs are required only after the death of the original owner.

Got a question? Ask Kim at askkim@kiplinger.com.




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