Save Money Re­tire­ment dis­tri­bu­tion dead­line draws near

The Denver Post - - BUSINESS -

The IRS de­fers taxes on many re­tire­ment ac­counts. But at a cer­tain point, the agency wants to start col­lect­ing its due. You must start tak­ing re­quired min­i­mum dis­tri­bu­tions, or RMDs, at age 70K.

RMDs are re­quired from tax-de­ferred re­tire­ment plans: tra­di­tional in­di­vid­ual re­tire­ment ac­counts, SEP and Sim­ple IRAs, and work­place plans like 401(k)s. They’re not re­quired from Roth IRAs.

In gen­eral, you have to take your al­lot­ted dis­tri­bu­tions by Dec. 31 each year. RMD first-timers — those who turned 70K just this year — get an ex­ten­sion to April 1.

• If el­i­gi­ble, de­cide if you want to use an ex­ten­sion: Us­ing it means you’ll have to take both this year’s and next year’s RMD in 2017. That mat­ters be­cause these dis­tri­bu­tions are taxed.

• Get the process rolling: The amount you need to with­draw is based on an IRS cal­cu­la­tion that di­vides your ac­count bal­ance at the end of the prior year by a life ex­pectancy fac­tor for your age. The RMD will be cal­cu­lated sep­a­rately for each re­tire­ment ac­count, and ac­count providers typ­i­cally do the math for you.

• Do bet­ter next year: Ask your plan ad­min­is­tra­tor to cal­cu­late your RMD amount au­to­mat­i­cally at the end of each year and send you a dis­tri­bu­tion each month or each quar­ter, just like a pay­check. NerdWal­let

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