General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsWatch out for this sneaky 50 percent retirement fee
I hope most people know about this penalty. If your financial advisor doesn't let you know fire his ass and get a new one.
_________________________________________________________________________________________________
You actually cant leave your retirement funds untouched forever the IRS has made sure of that.
And if youre still holding onto your retirement savings in your 70s, you could get slapped with a painful tax bill.
Once you turn 70½, you are required to begin taking the required minimum distribution from your retirement accounts or face a 50% tax penalty.
For the oldest Boomers in the U.S. today, who turned 70 last year, time is running out.
http://www.king5.com/money/magnify-money/watch-out-for-this-sneaky-50-percent-retirement-fee/426589627
shraby
(21,946 posts)eniwetok
(1,629 posts)After all the ONLY reason people are given tax breaks on the IRA contributions is because it's for retirement!
But it's good to remind people about the terms of IRAs that might have been set up 35 years ago.
SharonClark
(10,014 posts)Doesn"t every article about retirement and money mention it at least once?
still_one
(92,209 posts)that when you reach 70.5 you have to start taking MRD.
This applies to deductible IRA's and 401Ks, not to a Roth IRA, because taxes have already been paid on that.
In some people's situation it is to their advantage to convert some or all of their 401K's or IRAs to a Roth before they turn 70.5, full or partial, but they have to be careful and do the numbers to make sure it works for them
You are right Sharon, this isn't sneaky. You are paying taxes on money you deferred
doc03
(35,340 posts)(retirement account) that is what it was meant for not an inheritance program. The RMD is very low
I started withdrawing from my IRA at 65. I started out at 4% a year and have increased it every year for inflation.
The RMD starts out at 3.56% at 70 1/2 even at 85 it is only 6.76%. If I have any complaints it would be the tax on
SS benefits that is a tax on a tax you paid.
Progressive dog
(6,904 posts)retirement. It's a nuisance, but financial advisors all know about it and will keep you informed of the minimum distribution required.
central scrutinizer
(11,650 posts)I estimate my income for the year, compare that to the amount where the marginal tax rate jumps from 15% to 25% and take the difference even if I don't need the cash. I want to leave as little untaxed money for my heirs to deal with as possible.
Ms. Toad
(34,074 posts)It's been that way since IRAs were first permitted.
moonscape
(4,673 posts)deserve to start getting some tax dollars on earned income at some point!
PoindexterOglethorpe
(25,861 posts)this isn't sneaky at all. Nor is it an obscure thing. If nothing else, the company holding your retirement fund should be letting you know about the mandatory disbursement of funds. And, to be honest, those most likely not to take disbursements, are likely to be wealthy enough to know about all of these things.
This is actually stupid click bait.