When to Take Retirement Plan DistributionsWhen the time comes to retire, you want to make certain you have the financial resources to live a comfortable lifestyle. Some of the questions you may have prior to retiring may include the following:
Withdrawing your Retirement Funds You must begin withdrawing funds (and incurring taxes on these withdrawals) no later than April 1 of the year you turn 70 ½. The reason behind this rule is to make sure retirement funds are distributed during typical retirement years (whether the money is spent or not). One thing to remember is that if you are still employed past the required age (70 ½) you are not required to make the mandatory withdrawals. The only time this exception does not apply is if you are a 5% or more owner of a business that provides the retirement plan. Your retirement assets will grow as long as they are in the retirement plan. Many choose to defer withdrawals as long as they can (law permitting) in order to preserve the tax shelter. Consult with your tax professional for more information about growing your retirement fund. The Magic Age of 70 ½ For the first 70 ½ years of your life, you should not take your money out of your retirement account. In fact, there is usually a 10% early-withdrawal penalty if you take money out of your IRA before the age of 59 ½. Between this age and 70 ½, you pay only the income tax on any amounts you choose to withdraw, with no tax on the return of after-tax contributions you made. Once you reach the age of 70 ½, you are required to begin making withdrawals. You can technically wait a year after you reach the age of 70 ½, but this could potentially mean a higher marginal tax rate. It is wise to start withdrawing the year you reach 70 ½. If you would like to learn more about preparing for your retirement or have questions about taxation, please contact Randy Jessup of BatesCarter today. For more information about BatesCarter and our role in providing sound advisory services to our clients in Gainesville, North Georgia and Metro Atlanta, please contact us today. |
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Retirement Professionals Located in Gainesville, Georgia, BatesCarter is a full service accounting and business advisory firm that has served businesses and individuals since 1962. For more information about our approach to retirement plans, please contact us today to learn more. We look forward to exceeding your expectations. Always. |