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Getting Money Out Of An IRA

When MUST I Take Money Out Of My IRA?

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Traditional IRA

If you have a traditional IRA, you must begin taking distributions from it by April 1 of the year following the year in which you become age 70 ?. If you don't take the mandatory minimum distributions from your IRA, an annual excise tax equal to 50% of the difference between what you were required to take out and what you actually did withdraw may apply.

Use the chart below to compute your required minimum distribution. Take the account balance on December 31 of the previous year and divide it by the figure next to your age. If your beneficiary is your spouse and more than ten years younger than you are, use the joint-life-and-last-survivor table in IRS Pub. 590. It's available at www.irs.gov/publications/p590/ar02.html#d0e12335 offsite link.

AGE

DIVISOR

AGE

DIVISOR

AGE

DIVISOR

AGE

DIVISOR

AGE

DIVISOR

70

27.4

77

21.2

84

15.5

91

10.8

98

7.1

71

26.5

78

20.3

85

14.8

92

10.2

99

6.7

72

25.6

79

19.5

86

14.1

93

9.6

100

6.3

73

24.7

80

18.7

87

13.4

94

9.1

101

5.9

74

23.8

81

17.9

88

12.7

95

8.6

105

4.5

75

22.9

82

17.1

89

12.0

96

8.1

110

3.1

76

22.0

83

16.3

90

11.4

97

7.6

115+

1.9


EXAMPLE: Diana, who is 82 years old, has an IRA account worth $320,000 as of December 31st of last year. Her pension from a life-long career with the same company is enough to pay for her living expenses, even with a diagnosis of severe arthritis. Because of this, she only wants to make the minimum distribution possible from her IRA, since the distribution will be taxable. Her minimum distribution is $20,000: $320,000 (the account value as of December 31st of last year) divided by 17.1, the divisor for age 82.

Roth IRA

There are no requirements to withdraw money from a Roth IRA at any time.

                                                                                                               Edited by: Peg Downey, CFP, NAPFA
                                                                                                                                  Money Plans
                                                                                                                                  Silver Spring, MD
                                                                                                                                  January 2008


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