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RMD Basics

12/15/2016

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If you own or are the beneficiary of an IRA, 401(K) or other retirement plan, review this to avoid an RMD ( required minimum distribution) error.  Failure to take at least the RMD  amount each year results in a 50%  penalty by the IRS ! 

  • IRA owners:  your first RMD  must be taken no later than April 1st of the the year following the year you turn 70 1/2 .
  • You reach age 70 1/2 on the date that is 6 calendar months after the date of your 70th birthday. 
  • IRA owners after your very first RMD, all subsequent RMDs must be taken no later than December 31st of each year.
  • RMDs are generally calculated by dividing the adjusted market value of your IRA as of December31st of the preceding year by the distribution period that corresponds with your age in the Uniform Lifetime Table (IRS Publication 590).
  • You must calculate the RMD amount for each IRA separately,  However, if you have more than one IRA (must be the same type), you don't have to take a separate RMD  for each-you can aggregate and withdraw the entire amount from just one or withdraw a portion from each IRA to satisfy your RMD. 
  • You can always withdraw more than the minimum distribution amount....just be prepared to pay the taxes.
  • Failure to take a timely RMD results in 50% penalty on the undistributed amount - this rule apples to both IRA owners and IRA beneficiaries. 
Photo :  https://www.flickr.com/photos/stevendepolo/5437288053  Source: www.irs.gov
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April 1st is coming… April 1st is coming…

3/29/2016

 
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That’s April 1st the deadline! DEADLINE: April 1st If you are an IRA owner and turned 70 1/2 in 2015, you have until April 1st, your required beginning date, to take your first required minimum distribution if you did not take it last year.  Keep in mind that you still have to take y our 2016 required minimum distribution by the December 31st deadline. DEADLINE: April 18th
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  • IRA Contributions
  • Correcting Excess IRA Contributions
  • Health Savings Account Contributions

Eligible IRA owners have until April 18,2016 to contribute up to $5,500 to their IRA(s) ($6,500 if age 50 or older) for 2015.  Remember this is an aggregate limit. April 18th is also the deadline to remove excess contributions made to an IRA(s) for 2015. To avoid the 6% penalty tax, excess contributions must be removed in a timely manner, completed no later than your tax return due date including extensions. And there is one more… health savings account contributions to an approved high-deductible plan. For 2015, if you had self-only HDHP coverage, you may contribute up to $3,350. Certain eligible individuals who were over age 55 at the end of the tax year may increase their contribution by $1,000. If you have family HDHP coverage, you may contribute up to $6,750.

As always consult your tax professional to be and keep tax advantageous!

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    Author

    Rhonda A. Mannes,
    ​CPA, ARA.
    Phone: 702-233-6310


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