Tuesday, September 2, 2014

Learn the rules of IRA Required Minimum Distributions

If you will be age 70 1/2 or older by the end of 2014, you must withdraw a minimum amount — a Required Minimum Distribution — from your non-Roth IRAs for 2014. Withdrawals are not required from Roth IRAs until after the owner’s death.

Required Minimum Distribution deadline

You must take your 2014 RMD by Dec. 31, 2014. If you reached the age of 70 1/2 in 2014, you can delay taking your 2014 RMD until April 1, 2015.

Required Minimum Distribution amount

Your 2014 RMD is your account balance as of the end of 2013 divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if your spouse is your sole beneficiary and is 10 or more years younger than you. You can use these worksheets to calculate your RMDs.

Failure to take full amount of a Required Minimum Distribution

If you fail to take the full amount of your RMD (you can always withdraw more than the required amount), you may have to pay a 50 percent excise tax on the amount not distributed as required.

• To report the excise tax, file Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts.

• See Form 5329 instructions for additional information about this tax.

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