Page 232 - FlipBook BACK FROM SARAN - MAY 5 2020 - Don't Make Me Say I Told You So_6.14x9.21_v9_Neat

218 Don’t Make Me Say I Told You So

cost of the car and the approximately $13,000 tax bill on the
withdrawal.

Required Minimum Distributions

The IRS requires that you start taking distributions from

your retirement accounts, referred to as “required minimum
distributions” (RMDs), the year you turn 70½. At that age, you

must start drawing down your tax-deferred retirement accounts
using a formula based on:

► The age of the account owner

► The age of the beneficiary of the retirement account

► Life expectancy tables based on the life of the owner or

the joint lives of the owner and the beneficiary

► The total value of the owner’s “qualified,” tax-deferred

retirement plans
Delete the s

The formula usually means that seniors are required to take
distributions that start at roughly 4% of the account values

each year and increase slightly in subsequent years. Here is an
example of an RMD from an IRA rollover account:

Chapter 5: Things That Can Wreck Your Retirement