Mandatory Withdrawals
You must begin taking distributions from an IRA (including a
SIMPLE IRA, but not a Roth IRA) no later than April 1st of the year
following the year in which you reach age 70-1/2. For any year after
you reach age 70-1/2, you must take the minimum distribution by December
31st of that year. There's an exception to this rule for Roth IRAs, which carry no mandatory distribution
requirements.
The amount of your mandatory distributions
must be calculated under a formula prescribed by the IRS. If you take
less than the required distribution, the penalty for taking too small
a distribution is a 50 percent excise tax on the amount not withdrawn
as required. You can always take more than the required amount (assuming
you're over age 59-1/2) but the extra withdrawals don't count toward
your minimums for future years.
Uniform Distribution Period Table for
Determining
Required Lifetime Minimum Distributions |
| Age of Individual |
Number of Payout/Distribution Years |
| 70 |
27.4 |
| 71 |
26.5 |
| 72 |
25.6 |
| 73 |
24.7 |
| 74 |
23.8 |
| 75 |
22.9 |
| 76 |
22.0 |
| 77 |
21.2 |
| 78 |
20.3 |
| 79 |
19.5 |
| 80 |
18.7 |
| 81 |
17.9 |
| 82 |
17.1 |
| 83 |
16.3 |
| 84 |
15.5 |
| 85 |
14.8 |
| 86 |
14.1 |
| 87 |
13.4 |
| 88 |
12.7 |
| 89 |
12.0 |
| 90 |
11.4 |
| 91 |
10.8 |
| 92 |
10.2 |
| 93 |
9.6 |
| 94 |
9.1 |
| 95 |
8.6 |
| 96 |
8.1 |
| 97 |
7.6 |
| 98 |
7.1 |
| 99 |
6.7 |
| 100 |
6.3 |
| 101 |
5.9 |
| 102 |
5.5 |
| 103 |
5.2 |
| 104 |
4.9 |
| 105 |
4.5 |
| 106 |
4.2 |
| 107 |
3.9 |
| 108 |
3.7 |
| 109 |
3.4 |
| 110 |
3.1 |
| 111 |
2.9 |
| 112 |
2.6 |
| 113 |
2.4 |
| 114 |
2.1 |
| 115 and older |
1.9 |
One simple and uniform table allows most participants
to determine the required minimum distributions. The table should
be used only by the owner of an IRA who is unmarried, married to a
spouse not more than 10 years younger, or whose spouse is not the
sole beneficiary. Thus, the IRA owner determines the required annual
distribution by:
- finding his/her current age on the table to obtain the distribution
period, and
- dividing that number into the account balance as of the end of
the previous year.
By using the uniform distribution period table, most participants
will be able to determine their required minimum distribution for
each year based on just their current age and the account balance
as of the end of the prior year.
 |
Warning Computing minimum IRA distributions
using the old rules can be a rather daunting task, especially if you've
established numerous IRAs over the years. Many financial institutions
are willing to help you compute the minimums if you consolidate your
accounts with them. Otherwise, you should consider hiring a financial
planner or accountant to help you set up a withdrawal schedule, since
the 50 percent penalty for making a mistake in this area is quite
severe. Special rules, too numerous to relate here, apply
if your beneficiary is not your spouse and is more than 10 years younger
than you, if you change beneficiaries, if your beneficiary dies or
if you receive an inherited IRA account. For more detailed information,
see IRS Publication 590, Individual Retirement Arrangements (IRAs). |
|
IRA trustees are required to provide account holders
with a statement of their year-end account balances by January 31.
In addition, the trustee is also required to state the amount of the
required distribution and the date by which such amounts must be distributed.
This is great news for IRA holders because it will relieve them of
the burden of making mandatory distribution calculations and staying
in compliance.
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