When you reach retirement age how do you accomplish smooth sailing with your retirement accounts and Required Minimum Distributions (RMDs)? RMDs are minimum amounts that you must withdraw from your retirement accounts annually. These begin in the year that you reaches 70 ½ years of age or, if later, the year in which you retire.

However, if your plan is an IRA or you are a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder reaches 70 ½, whether retired or not.

As a retirement plan participant or IRA owner, you are responsible for taking the correct amount of RMDs on time every year. This includes SEP IRAs and SIMPLE IRAs. If you fail to do so, you can incur stiff penalties.

If someone dies before he or she has begun withdrawing money for RMDs, different rules apply.

These distribution rules apply to all employer sponsored retirement plans, including profit-sharing plans, 401(k) plans, 403(b) plans, and 457(b) plans. The RMD rules also apply to traditional IRAs and IRA-based plans such as SEPs, SARSEPs, and SIMPLE IRAs.

A different deadline may apply to RMDs from pre-1987 contributions to a 403(b) plan. Ask your Certified Financial Planner (CFP) about what amount you need to withdraw after the age of 70 ½.

Be sure to check with your CFP about your obligations before you reach the age where you need to begin making withdrawals.

Les Merritt, CPA and CFP, has helped many retirees to navigate the RMD waters as they approach that age and beyond. Contact Les and his staff to prepare for retirement needs. You can expect professional advice that will keep you informed about how to move effortlessly through this and other transitions. Call (919) 269-8553 today to achieve smooth sailing for your family and yourself.

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