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Posted by askalot on December 28, 2006, 12:07 am
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I know that for conventional IRA's on which no taxes have
been withheld, that I must begin removing a prescribed
amount of funds before 1 April of the year following the
date of becoming 70 1/2.
Since reaching 59 1/2, I have on several occasions removed
funds from my IRA.
When I reach 70 1/2 in November of 2008 I will need to
remove an estimated $11,000 before 1 April 2008.
Over the past 3 years I have removed about $7,000 from my
IRA account.
My question is, can this $7,000 count toward my first
required distribution.?
Any guidance for planning purposes will be appreciated.
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
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<< to this newsgroup as well as our anti-spamming policy >>
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Posted by joetaxpayer on December 28, 2006, 8:34 pm
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askalot wrote:
> I know that for conventional IRA's on which no taxes have
> been withheld, that I must begin removing a prescribed
> amount of funds before 1 April of the year following the
> date of becoming 70 1/2.
>
> Since reaching 59 1/2, I have on several occasions removed
> funds from my IRA.
This has no impact on your RMD (except that you've reduced
the account a bit, and RMD is based on the balance from
prior year end)
> When I reach 70 1/2 in November of 2008 I will need to
> remove an estimated $11,000 before 1 April 2008.
If Nov 08 is your 70.5 date, you mean Apr 09 for 08 RMD and
then by Dec 09 for the 09 RMD. (i.e you will have two
distributions if you wait till Apr)
> Over the past 3 years I have removed about $7,000 from my
> IRA account.
>
> My question is, can this $7,000 count toward my first
> required distribution.?
>
> Any guidance for planning purposes will be appreciated.
See http://www.irs.gov/publications/p590/ch01.html#d0e5473
for further details on this. Also, consider converting some
IRA money each year to a Roth IRA, depending on your tax
bracket, this may save you money in the long run, and smooth
out the RMDs a bit as the RMD numbers continue to rise. JOE
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Bill on December 28, 2006, 8:34 pm
Please log in for more thread options eliway999@hotmail.com (askalot) posted:
> I know that for conventional IRA's on which no
> taxes have been withheld, that I must begin
> removing a prescribed amount of funds before
> 1 April of the year following the date of
> becoming 70 1/2.
You mean, I'm sure, to say "on which no taxes have been
_paid_.
> Since reaching 59 1/2, I have on several
> occasions removed funds from my IRA.
> When I reach 70 1/2 in November of 2008 I
> will need to remove an estimated $11,000
> before 1 April 2008.
Actually, the rule states that you must take a calculated
RMD (Required Minimum Distribution) by April 1 of the year
following the tax year in which you reach age 70 1/2. In
the example given, that would be by April 1 of _2009_.
However, that would result in a "double dip" requirement for
2009, since you would also be required to take an RMD that
year. So, most advisors would recommend taking the
distribution in the year required (or 2008, in your
instance). Otherwise, you might be kicked into a higher
marginal bracket for 2009 by the "double dip."
> Over the past 3 years I have removed about
> $7,000 from my IRA account.
> My question is, can this $7,000 count toward
> my first required distribution.?
No. Absolutely not. As with all other tax issues, the
income must be reported in the year received. So whenever
you took those earlier distributions, you should have
included them in your taxable income for the appropriate
year (as I'm sure you did, because the trustee would have
sent you a 1099 for the amount distributed).
Bill
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by A.G. Kalman on December 28, 2006, 8:34 pm
Please log in for more thread options askalot wrote:
> I know that for conventional IRA's on which no taxes have
> been withheld, that I must begin removing a prescribed
> amount of funds before 1 April of the year following the
> date of becoming 70 1/2.
>
> Since reaching 59 1/2, I have on several occasions removed
> funds from my IRA.
>
> When I reach 70 1/2 in November of 2008 I will need to
> remove an estimated $11,000 before 1 April 2008.
>
> Over the past 3 years I have removed about $7,000 from my
> IRA account.
>
> My question is, can this $7,000 count toward my first
> required distribution.?
>
> Any guidance for planning purposes will be appreciated.
In your first sentence delete the words "on which no taxes
have been withheld." You must start taking your RMD from a
traditional IRA in the year you attain age 70 1/2. You may
delay the first RMD until 4/1 of the next year without
incurring penalty.
If you turn age 70 1/2 in 11/08, your first RMD must be
taken no later than 4/1/09. Any distribution you take in
2008 will count as part of your RMD. Any distributions
taken prior to 2008 do not count against your RMD.
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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Posted by Harlan Lunsford on December 28, 2006, 8:34 pm
Please log in for more thread options askalot wrote:
> I know that for conventional IRA's on which no taxes have
> been withheld, that I must begin removing a prescribed
> amount of funds before 1 April of the year following the
> date of becoming 70 1/2.
>
> Since reaching 59 1/2, I have on several occasions removed
> funds from my IRA.
>
> When I reach 70 1/2 in November of 2008 I will need to
> remove an estimated $11,000 before 1 April 2008.
One of those year dates is incorrect I think. If the first
is correct, then you will need to take 2008's distribution
before April 1 2009.
> Over the past 3 years I have removed about $7,000 from my
> IRA account.
>
> My question is, can this $7,000 count toward my first
> required distribution.?
Nope. Minimum required is based on previous 12/31 balances.
Holiday ChEAr$,
Harlan Lunsford, EA n LA
<< ======================================================= >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ======================================================= >>
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