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New Tax Laws For Required IRA Minimum Distributions – Qualified Longevity Annuity Contract

Under current law, a person, once they reach 70 ½ years old, must begin taking a required yearly minimum distribution from a traditional IRA. The required minimum distribution amount that must be taken is based on the account balance on January 1 of each year divided by a factor for the age attained during that year. Law sets the factor for each age. As an example, a $100,000 IRA owned by a person who is 75 years old would have a factor of 22.9. The required minimum distribution would be calculated by dividing $100,000 by 22.9 resulting in a required minimum distribution of $4,367. There is no problem with taking more than $4,367. However, if you take less than the required amount, the IRS will assess a penalty equal to 50% of the shortfall. (more…)

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