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Posted by Phil Marti on December 28, 2006, 8:34 pm
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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.
Close enough. Actually, April 1 is timely.
> 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.
I don't know whether this is a typo or you're confused. If
you turn 70 1/2 in 2008, you must take a distribution for
2008 by 4/1/2009. You also must take a distribution for
2009 between 1/1/2009 and 12/31/2009.
> 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.?
No. Your 2008 required distribution will be based on your
12/31/2007 account balance and must be taken between
1/1/2008 and 4/1/2009. See IRS Publication 590.
> Any guidance for planning purposes will be appreciated.
While you can delay your 2008 distribution until 2009, you
would then have to take two years' distributions in 2009.
This could lead to an unwelcome spike in your 2009 income,
depending on what amounts we're talking about.
Some people try to withdraw enough each year between 59 1/2
and 70 1/2 to reach the top of the current bracket, thus
reducing the balance that will be subject to the minimum
distributions. It really depends on your overall situation
and plans and needs for the IRA funds.
Converting a portion to Roth each year is also an option if
you are eligible. That also reduces the balance subject to
mandatory distribution, and Roths don't have required
distributions.
If the amounts are significant, you might benefit from a
session with a fee-based financial planner.
--
Phil Marti
Clarksburg, MD
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