Everything You Need to Know About Required 401(k) and IRA Withdrawals

via Wall Street Journal

If you miss a required withdrawal, the IRS can be surprisingly forgiving (if you file the right form).

If you are one of the millions of Americans with a retirement-savings account, three of the most important letters in your financial life might be these: RMD.

They stand for required minimum distribution, which is something that the nation’s baby boomers now need to grapple with for the first time. It refers to an annual payout that savers must take from their retirement kitty at a certain point, as required by law.

The first of the boomers (people born mid-1946 through 1964) are just now hitting the age of 70½, when most will be required to pull money out of their 401(k)s and IRAs, but there are a dizzying array of exceptions and deadlines regarding these payouts. For example, some people who are still working at age 70½ don’t have to start taking RMDs from a 401(k).

“I was surprised at how complicated the process was for me—and I’m an expert,” says Natalie Choate, a lawyer with Nutter, McClennen & Fish in Boston who turned 70½ last year.

Read the full article here

About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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