Required Minimum Distributions
Generally, minimum distributions are required from tax-advantaged retirement accounts beginning at age 70½. If you do not take a Required Minimum Distribution (RMD), the IRS will assess a 50% penalty on the amount you should have withdrawn.
Roth IRAs are one exception. Thus, it may make sense to roll Roth §403(b)/
§401(k)s into Roth IRAs once you are eligible. Also, if you contributed to a §403(b) prior to 1986, you may be able to postpone withdrawals on a portion of the accumulated assets until age 75.
RMD amounts are generally calculated by dividing the market value of your account as of 12/31 of the previous year by a life expectancy factor as published in the IRS Uniform Life Table. If your spouse is more than ten years younger than you and is your sole beneficiary, you can use the true Joint Life Expectancy factor for your RMD calculations. This will yield a smaller RMD, enabling more of your funds to remain tax-advantaged. These tables recalculate life expectancies each year so you will not outlive your retirement assets if you withdraw the minimums.
Your Legend Advisor can recommend strategies to maintain the tax-advantaged status of your assets as long as possible and help determine your required minimum distributions.
Distributions from a traditional retirement account are subject to ordinary income tax in the year distributed. Distributions taken prior to age 59½ may incur an additional 10% penalty.
Distributions from a Roth account are tax-free if the account has been funded for at least five years and the participant is over age 59½.
Legend Equities Corporation and its affiliates do not provide tax information or advice.