Required Minimum Distribution (RMD)

vagabond · 09-02-2008, 12:34 PM

Given the demographics of APC members, this is probably not an issue, but it could be for your friends or relatives. This rule can be quite devastating to the unwary or uninformed. I once had a client who came to me almost in tears. He was 91 years old, never got the word of RMD, and the financial institution decided, after 20 years of holding on to his IRA, sent him the balance. The penalties associated with non-compliance almost sent him to his grave. He just stared at me and wondered how he was going to have enough money to pay it. At that age, he could not possibly get a job so he could pay it off, even if the IRS allowed him to make payments.

Quote:

From Associated Press:
DES MOINES, Iowa - There's some sentiment that a government rule that forces retirees to withdraw money from their IRA and 401(k) accounts when they turn 70 1/2 may need to be changed. That's because people are living longer and need to keep as much of their retirement money for as long as possible, said several financial advisers and a leader of the Senate Finance Committee.

The required minimum distribution, or RMD, rules force tens of millions of retirees to take money out of their tax-deferred retirement accounts each year. The reason for the forced disbursement is simple — the government figures it's waited long enough for the taxes on that sheltered cash. The rule to force withdrawals, developed more than 20 years ago, also was intended to make sure that tax-deferred retirement accounts are used for their intended purpose and not by those who would accumulate money tax-free to pass on to heirs.

Retirement account rules a surprise to many - Personal finance - MSNBC.com

Slice · 09-02-2008, 01:05 PM

Perhaps someday we will have the right to keep what we earn.

Flat tax, anyone?

ryan1234 · 09-02-2008, 05:53 PM

He should figure is total social security contributions adjusted for inflation and charge the government interest (reasonable APR) on all money collected and used for the past say 60 some odd years.

WBTax · 09-08-2008, 11:44 AM

The tax is 50% of what you SHOULD have taken out. Government figures if the taxpayers don't need it or want it, the government's got a better idea of what to do with it.

NOW if you had a ROTH IRA, there are NO RMD's. Keep it as long as you like.

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