One reason people are probably confused is because last year Congress issued an RMD holiday.
The law imposes a 50% excise tax on any RMD a taxpayer fails to take.
They got to take advantage of the RMD holiday, so there was no April 1 deadline in 2010.
Earnings on Roth IRA assets are tax-free if qualified, and there is no required minimum distribution (RMD) amounts.
The RMD provision also applies to traditional 401(k)s but not to an individual's own Roth IRAs or Roth 401(k)s.
Divide the IRA balance by the life expectancy years to calculate the RMD.
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QCDs can be used to satisfy the RMD requirement for the IRA owner.
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Another trap: there is an RMD required in the year of death, if the deceased is over 70 and a half.
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For example, if you hold too much in stocks, you could use the RMD as a reason to sell certain stocks or stock funds.
He suggests that if you haven't yet taken your 2008 RMD, you wait until the middle of next week, to see if Treasury acts.
The RMD is calculated based on an IRA owner's age (older folks must take out more) and the IRA balance at the end of the previous year.
For most folks, they need their IRA distributions to live off, so at the beginning of the year, they set up automatic monthly payouts to meet the RMD requirements.
Families roll over the whole IRA by mistake, but the RMD should first be distributed out to the beneficiaries named on the IRA beneficiary designation form (not the estate), he says.
Withdrawals of the required minimum distribution (RMD) must start on Dec. 31 of the year after inheriting the IRA. These are taxable, but far less so than if a lump sum was taken.
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Usually for your first RMD you have until April 1 of the following year to take it, but in this case, these folks have to take their first RMD by Dec. 31, 2010, not April 1, 2011.
Because of the way the RMD holiday played out for folks due to take money out of their IRAs for the first time, there was no April 1 deadline for IRA holders last year, but there is this year.
In 2009, in response to the Great Recession, Congress suspended the IRA required minimum distribution rules (the RMD holiday) for one year for older taxpayers (70 and a half or older) so they could keep their money in the account and let it grow tax-deferred.
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