Tag Archives: RMD

Required Minimum Distributions

Retirement Readings

March 23, 2016

rmd ART

CALCULATING REQUIRED MINIMUM DISTRIBUTIONS

The objective of the required minimum distribution rule is to ensure that the entire value of a traditional IRA or employer-sponsored qualified retirement plan account will be distributed over the IRA owner’s/retired employee’s life expectancy. IRS regulations include a “Uniform Lifetime Table” that is generally used to calculate the required minimum distributions that must be made from qualified plans, including 401(k) plans, Section 403(b) annuities and regular IRAs.To calculate your annual required minimum distribution, follow these simple steps:

Example:

Step 1:

Account balance as of the previous December 31:

$______ $200,000

Step 2:

Distribution period factor based on your age as of December 31 in the year for which the distribution is being calculated:

25.6

Step 3:

Divide Step 1 by Step 2; the result is your annual required minimum distribution for the year:

$______ $7,812.50

Uniform Lifetime Table:

Age

Distribution Period Factor

Age

Distribution Period Factor

Age

Distribution Period Factor

70

27.4

86

14.1

102

5.5

71

26.5

87

13.4

103

5.2

72

25.6

88

12.7

104

4.9

73

24.7

89

12.0

105

4.5

74

23.8

90

11.4

106

4.2

75

22.9

91

10.8

107

3.9

76

22.0

92

10.2

108

3.7

77

21.2

93

9.6

109

3.4

78

20.3

94

9.1

110

3.1

79

19.5

95

8.6

111

2.9

80

18.7

96

8.1

112

2.6

81

17.9

97

7.6

113

2.4

82

17.1

98

71

114

2.1

83

16.3

99

6.7

115

1.9

84

15.5

100

6.3

and later

85

14.8

101

5.9

 

 

EXCEPTION: If your beneficiary is your spouse who is more than 10 years younger than you, instead of this table you can use the actual joint life expectancy of you and your spouse from the IRS Joint and Last Survivor Table to calculate required minimum distributions.

NOTE: The above discussion does not apply to non-deductible Roth IRAs, which are not subject to minimum distribution requirements.

Please contact my office if you would like additional information on required minimum distributions.

MESSAGES from the Masters…

YOU DESERVE TO BE HAPPY by Brian Tracy

Achieving your own happiness is the best measure of how well you are living your life and enjoying your relationships.

EVERYONE IS DIFFERENT

Happiness in life is like a smorgasbord. If 100 people went to a smorgasbord and each put food on their plate in the quantity and mix that each felt would be most pleasing to him, every plate would be different. Happiness is the same way. Each person requires a particular combination of those ingredients to feel the very best about himself or herself.

LISTEN TO YOUR HEART

And your mix is changing continually. Therefore, the only way to judge whether a job, a relationship, an investment, or any decision, is right for you is to get in touch with your feelings and listen to your heart.

BE TRUE TO YOURSELF

You’re true to yourself only when you follow your inner light, when you listen to what Ralph Waldo Emerson called the “still, small voice within.” You’re being the very best person you can be only when you have the courage and the fortitude to allow your definition of happiness, whatever it may be, to be the guiding light of every part of your life.

THERE ARE NO LIMITS

Accept the notion that you deserve all the happiness you can honestly attain through the application of your talents and abilities. The more you like and respect yourself, the more deserving you will feel of the good things in life. And the more deserving you feel, the more likely you will attain and hold on to the happiness you are working toward.

MAKE HAPPINESS YOUR KEY MEASURE

You should make happiness the organizing principle of your life. Compare every possible action and decision you make against your standard of happiness to see whether that action would make you happier or unhappier.

PAY THE PRICE

Of course, there are countless times when you will have to do little things that don’t make you happy along the way toward those larger things that make you very happy indeed. We call this paying the price of success in advance. You must pay your dues. Sometimes these interim steps don’t make you happy directly, but the happiness you achieve from attaining your goal will be so great that it totally overwhelms the temporary inconveniences and dissatisfactions of getting there.

QUOTES from the Masters…

 

On Gratitude:

 

“Sometimes our light goes out but is blown into flame by another human being. Each of us owes deepest thanks to those who have rekindled this light.” — Albert Schweitzer

“The more you recognize and express gratitude for the things you have, the more things you will have to express gratitude for.” — Zig Ziglar

“There is no better opportunity to receive more than to be thankful for what you already have. Thanksgiving opens the windows of opportunity for ideas to flow you way.” — Jim Rohn

 

On Habits:

 

“Being miserable is a habit; being happy is a habit; and the choice is yours.” — Tom Hopkins

“Good habits are hard to form and easy to live with. Bad habits are easy to form and hard to live with. Nothing is neutral. Everything counts.” — Brian Tracy

“Good habits are as addictive as bad habits, and a lot more rewarding.” — Harvey Mackay

“Nothing needs reforming so much as other people’s habits.” — Mark Twain

February 24, 2016 Newsletter – Retirement Readings/RMD

Retirement Readings

February 24, 2016
rmd image

The objective of the required minimum distribution rule is to ensure that the entire value of a traditional IRA or employer-sponsored qualified retirement plan account will be distributed over the IRA owner’s/retired employee’s life expectancy. When Must Required Minimum Distributions Begin?

In the case of traditional IRAs, required minimum distributions must begin no later than April 1 of the year following the year in which you reach age 70-1/2 and must continue each year thereafter.

In the case of employer-sponsored qualified retirement plans, required minimum distributions must begin by April 1 of the year that follows the later of (1) the calendar year in which you reach age 70-1/2 or (2) the calendar year in which you retire from employment with the employer maintaining the plan (unless the plan requires that you begin receiving distributions by April 1 of the year that follows the year in which you reach age 70-1/2).

If you wait until the year following the year in which you reach age 70-1/2 or, in the case of a qualified retirement plan, retire from employment, you must receive a minimum distribution on behalf of the previous year by April 1 of the current year, and a minimum distribution on behalf of the current year by December 31 of that year.

How Are Required Minimum Distribution Amounts Calculated?

IRS regulations regarding required minimum distributions include a “Uniform Lifetime Table” with “Distribution Period Factors.” The appropriate “Distribution Period Factor,” based on your age in the distribution year, is divided into your account balance as of the previous December 31 in order to determine your required minimum distribution for the current tax year.

What Happens if Minimum Distribution Requirements Are Not Met?

The difference between the required minimum distribution you should have received and the lower amount you actually received is subject to a penalty tax of 50%…an outcome to be avoided! Financial institutions report IRA distributions to the IRS on Form 5498 and are required to indicate if the IRA is subject to required minimum distributions.

May I Withdraw More Than the Required Minimum Distribution?

Yes, although minimizing qualified plan and IRA distributions may result in substantial tax savings. Consult your financial advisor for a more in-depth analysis.

*NOTE: The above discussion does not apply to non-deductible Roth IRAs, which are not subject to minimum distribution requirements.

Please contact my office, Contact@benefitci.com, or call 909-548-7444, if you would like additional information on required minimum distributions.

 

MESSAGES from the Masters…

WORDS by Zig Ziglar

Frequently, we become so pragmatic that we fail to be effective. Years ago the editor of the Dallas Morning News pointed out to the sportswriters that “Bill” was not a suitable substitute for “William,” and “Charlie” was not a suitable substitute for “Charles.”

Taking him literally, one of the sportswriters, in the heyday of Doak Walker of Southern Methodist University, wrote about an important game. In his story he pointed out that in the third quarter Doak Walker had left the game with a “Charles horse.” I think you’ll agree that the story lost some meaning with the use of “Charles.”

Perhaps the ultimate absurdity occurred in an article in a national publication when the writer set up the computer to analyze Lincoln’s Gettysburg Address. Incidentally, that address contains 362 words and 302 of them are one syllable. It’s simple and direct, but powerful and effective.

The computer, however, made some recommendations about how the speech really should have been given. For example, instead of saying, “Four score and seven years,” the computer deemed that approach too wordy and suggested, “Eighty-seven years.” The efficiency in the reduction is obvious, but the loss of effectiveness, power, drama, and passion is even more obvious.

When Lincoln said, “We are engaged in a great civil war,” the computer questioned whether the word great was justified. This despite the fact that our nation suffered 646,392 casualties, including 364,511 deaths. The computer stated that the sentences were too long, and it criticized the statement that we could never forget what happened at Gettysburg as being negative.

I think you’ll agree that eloquence and drama, combined with passion, logic, and common sense, are far more effective in inspiring people to do great things than technical correctness.

Think about it. Knowing their power, use your words carefully. You’ll be a greater contributor to humankind.

 

QUOTES from the Masters…

On Kindness

“I believe…that every human mind feels pleasure in doing good to another.” — Thomas Jefferson

“The world is my country, all mankind are my brethren, and to do good is my religion.” — Thomas Paine

“Too often we underestimate the power of a touch, a smile, a kind word, a listening ear, an honest compliment, or the smallest act of caring, all of which have the potential to turn a life around.” — Leo Buscaglia

“Because the soul has such deep roots in personal and social life and its values run so contrary to modern concerns, caring for the soul may well turn out to be a radical act, a challenge to accepted norms.” — Thomas Moore

On Faith

“When you come to the edge of all the light you know, and are about to step off into the darkness of the unknown, faith is knowing one of two things will happen: there will be something solid to stand on, or you will be taught how to fly.” — Barbara J. Winter

“Certain thoughts are prayers. There are moments when, whatever be the attitude of the body, the soul is on its knees.” — Victor Hugo

“Spiritual values transcend the material artifacts that we can touch and see. They take us into the realm of beauty, inspiration and love.” — Nido Qubein