Take 'Em or pay the price

Ashlea Ebeling Forbes wrote an article that over half the people who are required by law to take money from their accounts individual retirement (IRA) at year-end failed to do so from the beginning of this month, according to a recent survey by Fidelity Investments. Maybe these people do not need the money in their IRA to cover the expenses of every day.

Why should you be concerned about the deadline for the end of the year? If you miss it, you pay the penalty is 50% the amount you should have taken in distributions, according to the tables Internal Revenue Service
Here is a summary of the basic rules :. IRA owners must normally start taking required minimum annual distributions (RMD) after they turn 70½ from their own traditional IRA or IRA inherited from a spouse, but not their Roth accounts. IRA heirs Non-spouses of any age must take RMD both traditional and Roth accounts.

The amount you have to make is not arbitrary, but calculated based on your life expectancy and your IRA balance in the end of the previous year. There are also special rules. When you turn 70½, you have until April 1 of the following year to take your first distribution. There is also a required RMD in the year of death, if the deceased is about 70½.

One reason to wait until the end of the year to take your RMD distribution is to let the money continue to grow tax deferred as long as possible. Another reason to hold off on taking distributions for the year is whether Congress will restore law Rollover IRA-charity, which expired on 31 December 2011. It allows you to direct the custodian of your pretax IRA to transfer up to $ 100,000 a year to a public charity, as the LIFE Foundation without having to count the distribution in your income. In return, you forgo the tax deduction on charitable income. But this strategy can leave you in advance whether or not you itemize deductions normally or not.

For more advice on your IRA, contact your financial advisor.