# Do You Have To Take Minimum Distribution On Your IRA?



## Lon (May 25, 2016)

As required by law I have been taking mine for 10 years. Anyone else old enough to be taking MD as well?

What is your thinking about Minimum Distribution requirements for IRA Accounts?


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## Guitarist (May 25, 2016)

I have no idea what you're talking about.


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## Falcon (May 25, 2016)

It's good for me. It goes directly into my checking account.


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## Lon (May 25, 2016)

Guitarist said:


> I have no idea what you're talking about.




I guess that's maybe because you don't have a IRA account. Right?


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## Jackie22 (May 25, 2016)

Mine goes into my checking also right before Christmas..


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## Don M. (May 25, 2016)

Yes, and If I had my choice, I wouldn't take the full MRD.  Much of it just goes into the bank where it earns virtually no interest.


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## Ken N Tx (May 26, 2016)

Falcon said:


> It's good for me. It goes directly into my checking account.





Don M. said:


> Yes, and If I had my choice, I wouldn't take the full MRD.  Much of it just goes into the bank where it earns virtually no interest.


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## Butterfly (May 26, 2016)

I have to take my first MRD this year.


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## Underock1 (May 26, 2016)

Been taking them for 13 years and my wife's for 6 until rolling hers into my own at her passing. In the early years we used to withdraw just to pay an occasional large expense. We had taxes automatically taken out on withdrawals. We always ended up getting a full refund at the end of the year so I quit doing that. As you get older the MRD % goes up and becomes quite sizable in the higher age brackets. I always tried to keep as much money as possible invested inside the IRA. Its really the main thing that secured our financial situation. At 83 and barring some severe medical disaster I have more than enough to get me through. With the state of the market, I am now all in cash. 

Note: I have the original IRA that first came out. NOT a Roth.

A Heads Up: We were applying for a subsidized senior apartment and were advised that if you take a specified amount out each month as opposed to intermittent withdrawals, it is considered income and can put you over the income limit to qualify for the apartment,


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## Sunny (May 30, 2016)

It is very important to take at least the required MRD each year, otherwise the government will take part of it. There are many online sites, including your bank(s), that will tell you the amount you have to take out each year.


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## mathjak107 (Jul 19, 2016)

this is why roths can be so powerful in retirement even without tax changes .  so much is linked to taxable income . everything from getting ss taxed , to what you pay for medicare to surcharges on capital gains , rmd's , etc ,

my biggest regret is not doing roths when i had the chance .

i always thought who would be in a higher tax bracket with no pay checks ?  boy was i wrong .

it isn't about the tax brackets as much as everything linked . had i  been smarter today while delaying ss and to young for medicare i would be able to get a subsidy on my aca plan too.

for most of the youngin today roths are the only way they should go .

the mistake folks make is they think in terms of just what they earn in their final years and go when the income stops we will be lower .

nope , it is not about just your final years income .

for most jobs you ramp up over decades from low pay to higher pay . your career average spanning decades will likely be lower then your retirement income because we tend to hover around the lifestyle the final years income brought us .

unless you are starting out in the upper tax brackets like a dr or lawyer odds are a roth will be unbeatable even if tax brackets do not change . they have no rmd's either .

rmd's can be a tax nightmare for some folks as they get pushed in to higher brackets and may even end up getting ss taxed when it wasn't .


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## Bobw235 (Jul 19, 2016)

mathjak107 said:


> this is why roths can be so powerful in retirement even without tax changes .  so much is linked to taxable income . everything from getting ss taxed , to what you pay for medicare to surcharges on capital gains , rmd's , etc ,
> 
> my biggest regret is not doing roths when i had the chance .



In our early working lives, before Roths became available, my wife and I did the traditional IRAs each year. Once Roth IRAs became available, we did those for a few years, but soon found ourselves ineligible once our combined income went over threshold. We switched back to regular IRAs for a time, but the last few years of our working life, we just simply put it all into our 401(k) accounts. Not sure when we'll have to start taking minimum distributions, but having the Roth funds available, combined with non-qualified investment accounts will apparently help forestall RMDs for a time.


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## mathjak107 (Jul 19, 2016)

a mix is great to have . i made the mistake of  wanting that tax deduction and did no roths . now i lost a lot of flexibility in my options in retirement .

who knew so much was linked to retirement income back then .

this is one of the dangers of doing your own planning . you only know what you know but can't consider what you don't know .

but even having a planner is no guarantee they know .  most planners are only well schooled in the accumulation side of things . the first half of the game as i call it .

with baby boomers raising family's and saving money that was the side they ended up in .

but now the 2nd half of the game has different rules and strategy's .  most planners are not well versed in this half yet .

in fact about 10 years ago we were featured in money magazine . they did a story on us where they wanted their team of pro's to look at my self done plans and see what they would do different .

except for the fact i was going to  self insure long term care which they were against and were right they found little to fix .

in fact there was not one word about me not doing roths . that was a bad mistake in the scheme of things .


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## Bobw235 (Jul 19, 2016)

mathjak107 said:


> this is one of the dangers of doing your own planning . you only know what you know but can't consider what you don't know .
> 
> but even having a planner is no guarantee they know .  most planners are only well schooled in the accumulation side of things .



I've already started talking with my planner about wanting more advice down the road with things like social security, medicare, relocating to another part of the country, etc. I suspect his firm will be adding resources to help seniors in other facets of long-term planning. Don't think they're there yet, it's coming. They already do the financial planning piece, which is pretty straight forward once they have the data to work with.


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## mathjak107 (Jul 19, 2016)

most firms are really not well versed in the retirement strategy end at all . they usually just want to sell product and services .  remember you are not a client , you are a customer .

i know of very few financial company's that are really up on modern financial planning for retirement .

you will rarely see mention of what is called rising glide paths , or integrated strategy's  using spia's , permanent life insurance and your own investing .

when did you hear a financial planner talk about over funding a whole life policy for a source of tax free income that is never charged a fee or commission or swapping a tax infested ira out for a  leveraged tax free life policy ?

odds are never , as most are old school and do not keep up with the latest in research .  they just want to sell expensive insurance products whether they have an effective  plan for the use or not .

as an example :  if i leave my wife a million dollar tax infested ira she has no idea what she will actually get to keep . rmd's can put her in a higher tax bracket at a time she files single .

but if i take some of that ira money i can buy a single premium 1 million dollar policy for a lot less  .  i can buy that policy , leave her a million tax free dollars , leave the remaining ira to our kids and they get to pay the taxes over their lifetime .

ever see a planner tell someone how to take forever taxed money and turn it in to never taxed money ?  very unlikely .


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## Bobw235 (Jul 19, 2016)

mathjak107 said:


> most firms are really not well versed in the retirement strategy end at all . they usually just want to sell product and services .  remember you are not a client , you are a customer .
> 
> i know of very few financial company's that are really up on modern financial planning for retirement .
> 
> ...



Agree with all you've said here and that's why we went with a fee for service provider. He doesn't sell me anything. Doesn't try to sell me anything. I pay him a fee for which I get his time and expertise three to four times per year in formal sessions and several times a year by email for quick questions.

When we first started with him, he was with Ameriprise and suggested we look at a REIT. I read through the prospectus (now there's a good way to induce sleep) and told him my objections, not the least of which was the up front commission his firm would have taken. He never tried to push me into the product, but soon left Ameriprise because it was too restrictive in terms of what he could do for clients. Formed his own firm. Small and service oriented, which I appreciate having worked in the service industry all my career.


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## mathjak107 (Jul 19, 2016)

i just added a bit more to my post above on the subject . as you can tell i have a lot to say on this stuff lol .


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## Myquest55 (Jul 21, 2016)

Link to the original website:  http://www.topretirements.com/blog/...rthday.html/?awt_l=N4Y7l&awt_m=JZ0kfuBp.xaAA4

Came across this article today - One comment noted you MUST take your Required Minimum Distribution AFTER you turn 70-1/2 - not before.

July 20, 2016 — The oldest baby boomers, those born in the first post WWII year, are turning 70 this year. To which the IRS is probably saying, “Happy Birthday Boomer”, because the U.S. Treasury is about to get billions in tax presents. That’s about to happen because Required Minimum Distributions (RMDs) from your retirement funds are required in the year you turn 70 and 1/2.  To do the math for you, if you were born in 1946 and your birthday is prior to July 1, you will be 70 and 1/2 in 2016.
If that describes your situation, you must start taking your annual Required Minimum Distribution (RMD) from your IRAs and 401(k)s. This year (the year you turn 70 and 1/2) you could wait until April 1, 2017 to take it, but if you do you will also have to take your 2017 RMD by December 31, 2017.  
All of the money taken from regular IRAs and 401(k)s is taxable as ordinary income.  If you inherit an IRA or 401k you will likely have to take a RMD, even if you are not yet 70 1/2.
*How much will my RMD be*
 The required distribution percentage starts at 3.65% at age 70. Every year you live past that the percentage goes up, reaching 15.87% at age 100. Here is a link to Vanguard’s RMD Calculator Another way to calculate the RMD with the same effect is to use the IRS Life Expectancy Factor and divide your taxable retirement assets by that factor. At age 70 the Factor is 27.4.                


 You must calculate your RMD on all of your retirement accounts (except Roth IRAs), but you can withdraw it all from one account if you prefer. The company that administers your retirement account will usually help you calculate the amount you need to take out. Amounts in your Roth IRAs are not subject to RMDs.
*50% Penalty*
 The penalties for non-compliance are significant. According to the IRS, if an account owner fails to withdraw a RMD, fails to withdraw the full amount of the RMD, or fails to withdraw the RMD by the applicable deadline, the amount not withdrawn is taxed at 50%.

*Tax advantages made these programs work*
 IRAs and 401(k)s have turned out to be a great way to encourage retirement saving. Their tax advantages were appealing and easy to see: the contributions to the plans were tax deductible at the time they were made, and all earnings and capital gains have been tax free all this time.  But the intent behind the plans was not to let us enjoy these tax advantages forever. RMDs require that the money in the plans comes out eventually, and everything that does is taxable.
*Don’t pay taxes – make a Charitable Deduction instead*
 You don’t have to pay taxes on your distributions, if you give them to a qualified charity  (“qualified charitable distribution” (QCD). For many people this is a great strategy, because they probably would donate to a charity anyway. So instead of donating money from your non-retirement funds and then claiming a deduction, you give from your 401(k) or IRA and don’t have to count the money as income. The donation must be made directly from the financial institution to the charity. The amount of the distribution you donate (you can give all of part of your RMD) will not count as income for your taxes. The RMD charitable tax break was made permanent in 2015. If interested in this strategy, consult with the firm that holds your retirement funds – well before the end of the year!
*Text of IRS requirement:*
“You must take your first required minimum distribution for the year in which you turn age 70½. However, the first payment can be delayed until April 1 of the year following the year in which you turn 70½. For all subsequent years, including the year in which you were paid the first RMD by April 1, you must take the RMD by December 31 of the year.”
There are some exceptions which allow some people who have not yet retired to delay their first RMD. See RMD FAQs at the IRS, or your tax professional.


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## mathjak107 (Jul 23, 2016)

one of the beautiful advantages of roths is not dealing with this stuff . 

even if you reinvest the rmd money outside the ira in a brokerage account the future gains and distributions are forever taxed while the roths are never taxed after rmd age .

throw in the fact that if one spouse dies they then have to file single tax wise and those rmd's can not only be painful tax wise but they can get your  social security taxed , your medicare premiums increased and if you were lucky enough to be in the zero capital gains bracket while married now you may not be .

any discussion i see about roths pertains to just whether tax brackets will be higher .

the real value is in all the things linked to your taxable income .


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## Myquest55 (Jul 23, 2016)

Of course a Roth IRA is a great way to go but when the first IRAs came out the Roth options was not available and not everyone had the opportunity to roll over those balances.   This is just a reminder that IF you have a regular IRA and are 70-1/2 this year, you have to start taking the required minimum withdrawal.  ...and there are rules that govern that.

Saying that, I cannot imagine anyone NOT already taking it but I thought is was good information for those who haven't thought about it.


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## mathjak107 (Jul 23, 2016)

we had not only no roths but no 401k's in my early employment years . 401k's did not appear until the late 1980's .

but once roths did come out i believed a lot of the malarkey out there about how we will be in a lower bracket at retirement when the pay checks stopped so i stayed a way .

it was not until some really smart researchers recently realized that the roths were a better deal then we thought .

most careers ramp up over decades from low pay to higher pay . it is all about your average life time tax bracket . we tend to take the end bracket and base things on that but for 20 or 30 years we may have been at brackets way lower . roths can be very powerful putting money away in those earlier years at low tax brackets .

once you figure all the perks tied in to taxable income you can have 20% more cash flow with roths without a change in tax brackets.

the problem is roths conversions do not offer the same benefits and are rarely worth doing once you are near retirement unless you can squeeze them in to the 15% bracket vs 25% with rmd's


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## OneEyedDiva (Aug 18, 2016)

Yes...on traditional IRA's and I won't have to start until next year. I intend to have mine directly sent as charity to St. Jude's Children's hospital. The RMD will come to just $48 more a year than I'm already contributing as St. Jude Partner In Hope and it will be tax free since it's a charitable contribution. My traditional IRA is only a small portion of my portfolio. I'm glad most of my investments are in Roths.


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