The IRS can charge a penalty tax of up to 50 percent if you don’t take a minimum distribution from your IRA account by April 1 of the year after the year you turn age 70 1/2.
In other words, if you turn 70 1/2 in 2012, you need to take the required minimum distribution by April 1, 2013. Even if you start taking distributions earlier, once you turn 70 1/2, you need to make sure that the distributions for that year and future years meet the IRS minimum requirements.
The minimum distribution is based on the account balance divided by remaining life expectancy, or by the applicable distribution period. This amount needs to be recalculated every year to reflect changes in the account balance (for example, rising or falling stock or bond prices).
With the potential of a 50 percent penalty tax, any mistake in calculating your minimum distribution amounts can be costly. Our firm can help make sure that your IRA works for you — not the government.
Call our office today for help on your IRA accounting planning.
- 22 Apr, 2014
- Haley Spain
- 0 Comments