Retirement can be hard to plan for, but once you’ve planned for and retired, it is crucial to stay current on your rules and regulations surrounding your retirement plans.
Taxpayers born before July 1, 1945 must generally receive payments from their IRAs or workplace retirement plans by December 31. These payments are called RMDs, required minimum distributions, and must normally be made by the end of 2016.
As with most rules there are special exceptions regarding age and types of plans, you should speak to your plan administrator and your accountant to see how the rules apply to your situation. These rules apply to owners of traditional, Simplified Employee Pension, and SIMPLE IRAs, but not Roth IRAs providing it is not an inherited Roth.
Rules also apply to participants in 401(k), 403(b), and 457(b) plans. The RMD should be calculated by the plan administrator based on the life expectancy and the balance in the account. When payments are made the amounts will be reported to the taxpayer on a 1099-R.
Staying up to date on the rules regarding your retirement plans is important, as they are subject to change as your age does. It is a good idea to speak with your financial adviser and your accountant when determining what distributions are required and how to plan for taxes. It is even better for you the taxpayer if those two individuals talk and plans specifically for you and your situation.
The Wassman CPA Services website and blog is meant to offer general information to our readers. The information provided is not intended to replace or serve as a substitute for any accounting, tax or other professional advice, consultation or service. You should contact Wassman CPA Services for advice concerning specific matters prior to making any decisions.