Tax

These tips can help retirees make required minimum distributions easy and tax penalty free

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It’s almost time to turn the calendar over to a new year.

And if you’re retired or have inherited a retirement account, that means you’re on deadline to take your required minimum distributions by Dec. 31.

RMDs are the minimum amount individuals who are age 70½ and older must withdraw from their retirement funds, such as individual retirement accounts or workplace-based plans like 401(k)s. If you’ve inherited a retirement account, you may also have to make a withdrawal.
The amount you need to take out varies from year to year and is based on specific calculations, including what your account values were as of Dec. 31 the prior year, as well as your age.

The best time to get started on your RMD for this year is right now, because the paperwork may take some time to sort through.

And the sooner you start, the more likely you are to meet the deadline. (You have until April 1 if you just turned 70½ this year.)

In order to know how much you have to withdraw, you have to have an accurate picture of what you own.

Start by coming up with a list of those accounts.

“Always take an inventory first, so you know where all your retirement accounts are, so you don’t miss any,” said Ed Slott, CPA and founder of Ed Slott & Co. in Rockville Center, New York. It’s a good habit to get into and not only at RMD time, he said.

Also, be careful not to mistake an IRA for another type of account, which can lead you to miss your RMD, said Jeffrey Levine, director of financial planning at Blueprint Wealth Alliance in Garden City, New York…Read more>>

Source:-cnbc