How The Required Minimum Distribution Is Calculated
When calculating a required minimum distribution for any given year, it is always wise to confirm on the Internal Revenue Services website that you are using the latest calculation worksheets. If you are currently still in the workforce at 70 ½ then on some occasions the plan will allow you to only perform a required minimum distribution after you retire. If you have a Roth IRA, a withdrawal is not required until the owner of the IRA dies. The main purpose of the required minimum distribution is to make sure that these individuals with these retirement accounts are not avoiding paying taxes.
The Mistakes That Should Be Avoided When It Comes To RMD
There are mistakes that individuals with retirement accounts should avoid because it can lead to expensive penalties and fines with the IRS. A common mistakes made is not remembering that their RMD withdrawal is due! Some retirees that need to take RMD’s also make the mistake of not having a plan in place for the required withdrawals over the long term, accidentally withdrawing the wrong amount.
There can be consequences to mistakes made in regards to RMD’s. If you forget to make a payment or make a mistake the fine is 50 percent of the amount that should have been withdrawn plus the income tax that is owed. The can be reason enough to consult a financial professional. A financial professional can assist you in calculating the right amount to withdrawal without mistakes where penalties will apply. If you make long term plans when it comes to making your RMD, a professional can assist in minimizing your taxes.