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Author: Chipsboss Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19483  
Subject: Re: Too many taxes after retirement? Date: 1/16/2000 1:28 PM
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The issue of distributions from your IRA is so important, IMHO, that you need to look at the IRS regulations for yourself rather than just taking the advice of us strangers. The relevant publication is IRS 590, which of course is revised from time to time.
http://www.irs.ustreas.gov/forms_pubs/pubs/p5900107.htm
says in this brief excerpt:

"After age 59 1/2 and before age 70 1/2. After you reach age 59 1/2, you can withdraw assets from your traditional IRA without having to pay the 10% additional tax. Even though you can make withdrawals, you do not have to withdraw any assets from your IRA until you reach age 70 1/2."

More complete explanations and exceptions, special circumstances, and other matters are covered in the reference.

You face large penalties if you don't start withdrawals no later than the year in which you turn 70 1/2. Don't wait until age 72. You are not required to use up your IRA by age 72. If you use the age recalculation method of computing minimum required distributions (as detailed in the reference), it is highly unlikely that you will exhaust your IRA. This approach may produce some remarkable inheritance and income taxes for your estate. OTOH, if you elect not to recompute your life expectancy and start withdrawals at age 70, you will be required to use up ALL of your IRA by age 86. This approach can produce some remarkable income tax bills in your mid-80's.

Regards,

Chips





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