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Are You 70 1/2?

Published on: 10:53AM Mar 24, 2016

~~If you have retirement or IRA accounts and you are approaching age 70 1/2, you must be careful to make sure to take your required minimum distributions (RMD) and April 1 can be a key deadline.  Holders of these accounts are normally required to start taking RMDs in the year they turn 70 1/2, however, there is an exception to this rule.  For those farmers or other taxpayers who turn 70 1/2 in 2015, they can either take their RMD in 2015 or wait take it by April 1, 2016.  However, if they wait until 2016, they then are required to also take their 2016 RMD in the same year, therefore, you bunch up two RMDs into one year.

We normally recommend taking the distribution in the year you reach 70 1/2, but there may be times when it is better to postpone such as when you have a large amount of income in 2015 and expect to be in a much lower tax bracket in 2016.  Every situation is different so it is wise to review this with your tax advisor to determine the best option.

The penalty for not taking your RMD can be drastic since it is 50% of the RMD for that year.  Make sure you don't miss the deadline if you turn 70 1/2 in 2015.  You only have one week to comply.