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Author: QXZJ Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: IRA withdrawals Date: 4/4/2007 12:18 PM
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Hi, all--

My dad has a traditional IRA and wants to know the policy for the required minimum distributions: Is he allowed to take multiple distributions in a year? Or does the IRA require that you take one lump-sum payment per year?

Thanks for your help.

Jim
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Author: SirTas Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56592 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 12:31 PM
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Multiple distributions should be fine as long as the total amount comes up to the RMD for the year.

--SirTas

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Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56593 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 12:34 PM
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Here's everything you wanted to know about RMDs:

http://www.irs.gov/publications/p590/ch01.html#d0e5665

As you can see, it talks about:
You cannot keep funds in a traditional IRA indefinitely. Eventually they must be distributed. If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required.

However, it does say "distributions" (plural), and there are no requirements on whether it must be one or many. It can be done how you like other than making sure you are taking out at least the minimum each year.

Do read the publication for the full information though.


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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56594 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 1:00 PM
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In the year your father reaches age 70.5, he must begin mandatory withdrawals from his traditional IRAs (if more than one, he'd calculate it for each, but the required distribution can be taken from any one or combination of IRA's he wishes) as well as all employer sponsored defined contribution plans (such as 401(k) or profit sharing plans), unless he is still working for the employer and doesn't own more than 5% of the company.

The way this is figured for the Traditional IRA(s) (if he has $$ in employer plans that he must begin withdrawals on at 70.5, the plan will figure this for him), is you take the end of year balance on all each TIRA held (as of close of business 12/31 of the year prior to reaching 70.5) and then divide this by the IRS's calculation of joint life expectancy (27.4 if 70 at the end of the first year or 26.5 if 71 at the end of the first year). For the first year only, this amount must be withdrawn from any single or combination of the TIRA's by 4/1 of the following year (aka the required beginning date). It can be taken out all at once, monthly or any combination...as long as its out by 4/1. All subsequent years, the Minimum Required Distribution must come out by 12/31 of that year.

If your mother is at least 10 years younger than your father, then Table II is used to determine the divisor, rather that the unified table (Table III). See IRS Pub 590 (URL below)

Most brokerages will figure this for your dad, but its always good to double check their math.

The source for this is the IRS Publication 590, which you can see at

http://www.irs.gov/pub/irs-pdf/p590.pdf

BruceM

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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56596 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 2:33 PM
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My dad has a traditional IRA and wants to know the policy for the required minimum distributions: Is he allowed to take multiple distributions in a year? Or does the IRA require that you take one lump-sum payment per year?

He should contact his IRA custodian. Usually there are several payout options - once/year, quarterly or monthly, as long as the total payments equal (or exceed) his RMD.

foolazis

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Author: QXZJ Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56597 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 2:54 PM
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Hi, all--

Thanks so much for your help. I really appreciate it.

JIm

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56600 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 5:56 PM
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If youf father makes any type of charitable contributions for2007, RMD can be directed to charities with no tax liability.

It's a great deal.

http://www.ncpg.org/gov_relations/QUESTIONS%20AND%20ANSWERS%20ON%20THE%20IRA%20CHARITABLE%20ROLLOVER.pdf

buzman

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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56602 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 9:08 PM
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>> If youf father makes any type of charitable contributions for2007, RMD can be directed to charities with no tax liability.

It's a great deal.
<<

True. It's especially a good deal for people who want to donate to charity but won't be able to itemize, or who would be able to write off only a portion of it above their standard deduction.

#29

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Author: SirTas Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56603 of 74759
Subject: Re: IRA withdrawals Date: 4/4/2007 9:19 PM
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So, can you take several distributions, and direct some of them to go to charity, but only pay tax on the funds that you yourself receive?
--Sounds very good.

--SirTas

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56631 of 74759
Subject: Re: IRA withdrawals Date: 4/5/2007 6:36 PM
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So, can you take several distributions, and direct some of them to go to charity, but only pay tax on the funds that you yourself receive?
--Sounds very good.

--SirTas

------------------------------------------------------------------------

That only pertains to RMD.

Discuss this with a professional.

buzman

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Author: kahunacfa Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56996 of 74759
Subject: Re: IRA withdrawals Date: 4/20/2007 9:16 PM
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Here's everything you wanted to know about RMDs:

http://www.irs.gov/publications/p590/ch01.html#d0e5665

As you can see, it talks about:
You cannot keep funds in a traditional IRA indefinitely. Eventually they must be distributed. If there are no distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required.

However, it does say "distributions" (plural), and there are no requirements on whether it must be one or many. It can be done how you like other than making sure you are taking out at least the minimum each year.

Do read the publication for the full information though.
- DeltaOne81 | Date: 4/4/07 12:34 PM | Number: 56593

That is exactly the correct place to go, right to the source, The Infernal Revenue Service!!

Kahuna,CFA



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