March 30 is Required Minimum Withdrawal Deadline for IRAs, 401(k)s

9:22 pm Asset Protection, Estate Planning, Retirement Planning, Tax Planning

IRS Logo 150x150 March 30 is Required Minimum Withdrawal Deadline for IRAs, 401(k)sFor those who turned 70 ½ during 2011, March 30 is the deadline for taking the mandatory required minimum withdrawal from their IRAs and all employer-sponsored retirement plans, including 401(k)s.  RMD rules do not apply to Roth IRAs if the owner is still living.  The deadline has historically been April 1, but since that date falls on a weekend this year, the deadline is now this coming Friday.

The required minimum withdrawal (RMD) is calculated by an IRS table based on age, life expectancy and account balance.  Here is the table:

rmd March 30 is Required Minimum Withdrawal Deadline for IRAs, 401(k)s

If you are married to someone who is younger than you by 10 years or more, then you can use your joint life expectancy to figure your RMD.

This is the last time anyone who turns 70 ½ in the prior year has an extra three months to take their RMD; in 2012 – and beyond – you must take the RMD by Dec. 31 of the same year you turned 70 ½.  If you fail to do so, you could face a heavy penalty of up to half of the amount you should have withdrawn.

For those who didn’t want or need the extra taxable income, an IRA charitable rollover was a common estate planning strategy.  However, Congress did not extend the IRA charitable rollover into 2012, so unless it reinstates the rule retroactively for 2012, this strategy can no longer be used to remove taxable income in 2012.

Get started by contacting our Orange County asset protection estate planning law firm as soon as possible.

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