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Old 08-11-2014, 05:20 AM
 
Location: Central Massachusetts
4,800 posts, read 4,843,254 times
Reputation: 6377

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Your Retirement: Do You Understand Required Minimum Distributions? - Opinion - Heritage Newspapers


We have talked about this at least once here but it is always good to remind people. We get new members as well coming to get as much information as they can. Please read the above story if you have questions but I will open this with a quote that I think everyone really needs to take heed.

Quote:

How Much Do I Owe?

First and foremost, it is imperative that you do your calculations correctly. The penalty for not taking sufficient RMDs each year after age 70-and-a-half is significant: 50 percent!
It is possible that you can get away with missing or not taking enough. How you might ask? Well you have to do that in writing. You would need to write the IRS with a formal request. Don't miss it twice though. They are unforgiving.
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Old 08-11-2014, 10:17 AM
 
6,213 posts, read 4,718,283 times
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This issue is not a big deal....just a simple computer calculation. Any financial institution that holds your accounts will do the calculations and automatically send you the RMD to your bank or other accounts as you desire. And, yes, when you take distributions there may be taxes due.
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Old 08-11-2014, 10:33 AM
 
118 posts, read 104,674 times
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It shouldn't be a problem if you are in the Thrift Savings Plan. If you're taking monthly payments and it's not enough to meet the RMD for the year, in December the TSP will send you an additional amount to make up the difference.
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Old 08-11-2014, 10:33 AM
 
71,469 posts, read 71,652,652 times
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it actually is a combination of you and your spouses age that it is based on.

had I known that I would have tried the colleges looking for a wife.
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Old 08-11-2014, 11:03 AM
 
Location: Central Massachusetts
4,800 posts, read 4,843,254 times
Reputation: 6377
Quote:
Originally Posted by jrkliny View Post
This issue is not a big deal....just a simple computer calculation. Any financial institution that holds your accounts will do the calculations and automatically send you the RMD to your bank or other accounts as you desire. And, yes, when you take distributions there may be taxes due.

It is a big deal. 50% penalty is a huge deal. Make no mistake on that. Also only if you tell them to start that will they do that. The article is meant for those who do not know that. We do have lots of new and soon to be retirees.

Quote:
Originally Posted by Bureaucratic View Post
It shouldn't be a problem if you are in the Thrift Savings Plan. If you're taking monthly payments and it's not enough to meet the RMD for the year, in December the TSP will send you an additional amount to make up the difference.
It isnt just taking monthy payments. The total of tax exempt accounts are taken in account. Also most here are not like you and I and have TSP. Most have IRA's and 401K's in commercial accounts. If you have other accounts TSP cannot know the total so how can they do that as well.


Quote:
Originally Posted by mathjak107 View Post
it actually is a combination of you and your spouses age that it is based on.

had I known that I would have tried the colleges looking for a wife.
I am with you but I guess we will just have to live with our choices, aye?

Last point here to both jr and B and anyone else thinking someone will do the work for you. They will not be liable for the amount owed. Do you really think they have your best interest at heart? Take heed here. This is so very important. Uncle Sam knows how much money you have in account. You have been making record of that as the institution your money is housed in to the IRS. They are looking at that as a source of income to come.
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Old 08-11-2014, 11:45 AM
 
5,392 posts, read 6,529,269 times
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Maybe I am wrong but I don't think it is a big deal to do. It would be a big deal if you didn't do it properly.

Example: You have 1, 2 or 5 accounts (IRA/401/TSP/whatever) and you are approaching age 70, contact each account manager if they haven't already contacted you and they will calculate your MRDs for each account. Calculations are set into stone as to factors of that time time, your (and spouse's if any) age/life expectancies, the amount, the current rules and laws; and you review/authorize the MRD calculations. IRD and accounts talk back and forth electronically, you get the appropriate tax documents for filing at tax time. circle squared. No one ever has your best interest at heart but you so read what you sign.
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Old 08-11-2014, 12:15 PM
 
2,037 posts, read 1,945,753 times
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Quote:
Originally Posted by theoldnorthstate View Post
Maybe I am wrong but I don't think it is a big deal to do. It would be a big deal if you didn't do it properly.

Example: You have 1, 2 or 5 accounts (IRA/401/TSP/whatever) and you are approaching age 70, contact each account manager if they haven't already contacted you and they will calculate your MRDs for each account. Calculations are set into stone as to factors of that time time, your (and spouse's if any) age/life expectancies, the amount, the current rules and laws; and you review/authorize the MRD calculations. IRD and accounts talk back and forth electronically, you get the appropriate tax documents for filing at tax time. circle squared. No one ever has your best interest at heart but you so read what you sign.
I think that is the point of the OP, that everyone should contact each account manager at each retirement account when they are approaching 70 to make sure that RMDs will be set up and on their way to the account holders. I guess that might be a problem for forgetful people or people who may have declining mental abilities or other health problems as they approach 70?
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Old 08-11-2014, 04:06 PM
 
Location: 1000 miles from nowhere
549 posts, read 436,934 times
Reputation: 976
Quote:
Originally Posted by jrkliny View Post
This issue is not a big deal....just a simple computer calculation. Any financial institution that holds your accounts will do the calculations and automatically send you the RMD to your bank or other accounts as you desire. And, yes, when you take distributions there may be taxes due.
There almost certainly will be. This is the purpose of an RMD, yes? Nthing all other posters who suggest talking with financial institution/planner for advisement.
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