Non-Roth IRA withdrawal rules are very strict. You need to make sure that you completely understand the rules so that you don’t wind up losing money on your investment. For example, anyone who has reached the majority age of 70 ½ has to take out a minimum withdrawal from their IRA account or face severe penalties. If you are going to be turning age 70 ½ soon, you need to understand the rules and guidelines for your minimum distributions so that you don’t get penalized for not taking out enough money. Here are some basic rules and tips to keep in mind:
-If you turn age 70 ½ in 2010, your first IRA withdrawal must be made prior to April 1, 2011. If you want to put it off for a while, you can, but don’t put it off too long.
-Congress deliberately set up IRA accounts this way. It’s a way for them to force the hand of retirees and make them pay taxes on the money sooner instead of later. You should have expected this much.
-If you do NOT take out the required minimum amount, you will be forced to pay a 50% penalty on the difference. You can take MORE than the minimum, but never less. For example, if you are supposed to take out $5,000 and only take out $2,000, that leaves a $3,000 difference that you were supposed to withdrawal. Your penalty will be 50% of that, or $1,500.
-All IRA accounts are subject to the minimum IRA withdrawal guidelines EXCEPT for Roth IRAs.
-The amount that you have to withdrawal depends specifically on your account balance as well as the life expectancy of you and your beneficiary. The balance is divided by your life expectancy in years, so the more years you have left, the lower your minimum withdrawal amount will be.
These are all just general rules regarding IRA withdrawal, and you should always discuss your exact situation and circumstances with your own financial advisor before making any moves in your investments. There are not really any exceptions to the minimum withdrawal rules, but the actual amounts that need to be taken are different for everyone, which is why you need a personal advisor to instruct you on what is expected of you. As long as you know how much you have to take, and take at least that much in your IRA withdrawal every year, you will be just fine.