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Tag Archives: IRA

Turning 70 this year? Make sure you know the facts about IRA withdrawals

Posted on September 12, 2013 by Your LTC Resource
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Getting near the magic age of 70 ½? You will undoubtedly face a number of complicated tax and financial issues for the first time. Not addressing these issues properly could result in tax penalties.

Since I deal with many seniors, I make it my business to know the rules affecting taxes, traditional IRA contributions and required minimum distributions.

Here is some info that can help you plan ahead for this tricky year:

Traditional IRA Contributions – You cannot make a traditional IRS contribution in the year you reach the age of 70 ½. If you do make a contribution anytime during this year, it is treated as an excess contribution and is subject to a non-deductible 6% excise tax penalty for every year in which the excess contribution remains in the account. Yikes!

The way to avoid this penalty is to remove the excess contribution and the interest earned on that excess from the IRA prior to April 15th of the next year.

Although you can no longer make contributions to a your IRA, you can continue to make them to a Roth IRA (not to exceed the annual contribution limits), provided you still have earned income such as employment income.

Required Minimum Distributions – You must begin taking these from your qualified retirement plans and traditional IRA accounts in the year you turn 70 ½. However, you can also delay your distribution until April 1 of the year following the year you turn 70 ½ — but in the subsequent year, two distributions must be made.

It sure is complicated. So it’s good to have someone knowledgeable in your corner that can help you understand what’s coming up – including facts about Long-Term Health Care.

With many years’ experience dealing with clients in these matters, I can help, whether you are approaching 40, 50, 60, or beyond. I’m all about knowing where you are in life, and helping you make the right decisions.                ~ Elise  

 

 

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Posted in Long-term Care Insurance, Retirement | Tagged Individual retirement account, IRA, Qualified Retirement Plans (West's Employment Law Series Volumes 1 & 2), Roth IRA, Traditional IRA | Leave a reply

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