April 1st Deadine Approaching for Those Who are 70 1/2 Years Old
by Victoria Majors Jones, CPA on 03/21/11
When it comes to taxes, reaching age 70-1/2 is an important milestone. That's because you have to start taking minimum annual distributions from your traditional IRAs when you reach age 70-1/2. If you don't take these minimum distributions when you're supposed to, you could get hit with a 50% penalty tax!
When must these minimum distributions begin? If you reached age 70-1/2 in 2011, you have until April 1, 2012 to take your first year's distribution. However, if you wait until 2012 to take this distribution, you may end up being in a higher tax bracket in 2012. That's because you'll also have to take your second year's annual minimum distribution in 2012, since the extended deadline until April 1 is available only in the first distribution year.
The decision whether or not to accelerate minimum distribution payouts is not an easy one. Contact our office if you would like any help setting up the right IRA and retirement plan payout strategy for you and your family.
