How to Figure IRA Withdrawal (non-Roth)

chisueOctober 14, 2008

DH will be 70 1/2 in January 2009. I am not more than 10 years his junior. (I guess he does have time to acquire a trohphy wife, but it's unlikely.)

If I'm reading the rules right, the amount he must take out of his non-Roth IRA is figured on its balance as of Dec. 31, 2008. The divisor is 26.5. Am I correct this far?

OK, now...the withdrawal must be taken by...what date? (April something? 2009?)

Let's use a balance of $100,000 to figure a dollar amount.

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I can answer part of your question(s).

If your DH turns 70 1/2 in January 2009, then he has until April 1, 2010, to make the required minimum distribution for that year. Thereafter, the minimum distributions must be made by December 31 of the applicable year. So for example, he can take his 2009 distribution on 04/01/10, but then he must also take his 2010 distribution that same year by 12/31/10.

This information is found in IRS Publication 590. That publication also contains tables and examples that will show you how to calculate the amount that must be taken out each year.


    Bookmark   October 14, 2008 at 9:28AM
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Gosh, Scott, that was *fun*! (Reading the IRA 590!) It's only an hour of reading later and I'm still unsure -- guess the IRA has done its fine job again. LOL Seriously, thank you for the link.

I did pick up something about making charitable contributions with the withdrawals. Will have to find out more about that. (I HATE to pay FEDERAL TAXES!)

    Bookmark   October 14, 2008 at 11:45AM
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I believe that also have the option of putting the withdrawals into a Roth IRA.

    Bookmark   October 14, 2008 at 1:54PM
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Hmmm...can DH name our grandson (b. 2005) as a beneficiary and thus reduce the mandatory withdrawals? I don't understand the formulas for age averaging.

    Bookmark   October 14, 2008 at 2:34PM
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I do not think you can reduce the amounts of your required minimum distributions by listing your grandchild as a beneficiary.

In order to avoid "market timing" in taking your distributions, try to make them "neutral" with respect to the market performance. You can do that my planning in advance to take equal distributions of 1/4 of the total amount to be distritubed each quarter of 2009 -- say, March, June, Sept, and Dec.

If you are fortunate enough that you do not need the money from your distribution for living expenses, you can just transfer the money to a taxable account and put it in a similar investment that it was in in the tax deferred account -- or you could take the opportunity to consider a different investment.

One more thing: If you made any IRA contributions and paid taxes on them because your income was above the limit for taking a tax deduction, your required minimum distribution should deduct those taxed contribitutions, or you would be paying taxes on that money twice. I'm sure there an IRS information sheet that explains that whole situation. It makes excellent reading if you have insomnia. Look up tax form 8606. That's the one you should be using when you file your return to report your cumulated taxed IRA contributions.

Have fun.

    Bookmark   October 14, 2008 at 11:13PM
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Thank you, haus_proud. This is a small amount, and so far we don't need the cash. I'm going to talk to our accountant. I certainly appreciate everyone's input. It saves me from feeling 'lost' when discussing this with him. (I don't know if *all* accountants are so sober, but the ones we've had all were/are!)

    Bookmark   October 15, 2008 at 9:47AM
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