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Hello fools!
I'm sure all this has been answered before on TMF, but I received a disturbing phone call from my mom last night and am attempting to do a crash course in how to take the minimum distribution from an ira and a 401K. Facts: My mom was born on 8/15/29. She is aware that, even though she doesn't need the money, she has to start taking distributions this year. Even though she did well financially with her 401K, by investing the maximum, money scares her and she is just hoping that by avoiding the issue, it will all go away. I tried to steer her to a financial planner (hourly paid), but she won't go. So I have to tell her what to do. Please look at this and tell me what I've missed after my web crawl-crash course:
1. She has to base her withdraws on the accounts values as of 12/31/99 totals.
2. She is using my older brother as joint whatever (she is widowed) so their joint life expectancy from the irs tables is 26.2 (calculating my 40 something brother as a 60 year old.) She would have to take 1 devided by 26.2 to get the percentage of assets to withdraw from the accounts to be cool with the irs.
3.When she retired, she left the assets in her 401k plan at the same brokerage firm that took care of them while she worked and it's mostly stock in the company she worked for, stock in companies that merged and then split with her company, a vanguard mutual fund and a very small (6k) ira.
O.K.-First, are my assumptions and math correct?
What did I miss? I know the first distribution could wait until 4/15/01, but she would have to take two distributions and pay taxes on two on her '01 taxes. My main question is that my mom really just wants to remove some stock in the percentage in #2 from the plan, get the certificates, and hold it just like the other certificates in the safe deposit box. I can't find out if this is kosher or not anywhere. I think it sounds ok, because assets are coming out of the 401K, are no longer are growing tax-deferred, and it seems to me that she wouldn't have to pay taxes on them until the shares were sold. But there can't be a loophole this big, can there? I gotta be missing something? I appreciate any input, since time is becoming of the essence.
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