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ELDER CARE PLANNER
MANDATORY WITHDRAWALS FROM PENSIONS
In two cases you are forced to make annual withdrawals of
retirement money. This includes all pensions, IRAs (except the
Roth IRA), and self-employed plans. You must take minimum
annual amounts:
From your own accounts beginning the year you reach 701/2.
From any inherited account beginning the year after the original
account owner passes away.
Your Own Account – age 70 ½. The concept is easy to grasp.
You earned this money years ago, but IRS agreed to tax it later.
You are not allowed to continue the deferral beyond age 70 ½.
The custodian of the account (your bank or broker) will tell you
the minimum annual figure early each year. The calculation is
easy. Simply divide your account balance at the beginning of the
year by a factor from the table below. Use your age at the end of
the year:
Age Divisor
70 27.4 81 17.9 92 10.2 103 5.2
71 26.5 82 17.1 93 9.6 104 4.9
72 25.6 83 16.3 94 9.1 105 4.5
73 24.7 84 15.5 95 8.6 106 4.2
74 23.8 85 14.8 96 8.1 107 3.9
75 22.9 86 14.1 97 7.6 108 3.7
76 22.0 87 13.4 98 7.1 109 3.4
77 21.2 88 12.7 99 6.7 110 3.1
78 20.3 89 12.0 100 6.3 111 2.9
79 19.5 90 11.4 101 5.9 112 2.6
80 18.7 91 10.8 102 5.5 113 2.4
Inherited Account – Year Following Death. Suppose Aunt
Mary passes away and you inherit her IRA. If she died in 2004,
you will have mandatory withdrawals each year starting in 2005.
Perhaps you moved the account to your own bank or broker, but
this was not a “rollover”. It is still Aunt Mary’s account. Just read
the statement - it might say “First National Bank, custodian of the
IRA of Mary Smith (deceased), for the benefit of (your name).”
Your minimum distribution uses a different life expectancy table
than the one above, but the idea is very similar. So is the penalty.
I can help you with the calculations.
Santos Associates, FEDERALLY AUTHORIZED TAX
PRACTITIONERS, can help you with your accounting, tax
and financial planning needs. Call today for an appointment &
consultation. We are not attorneys, we can refer competent
council upon request.
