Required minimum distributions on IRA and annuity?

Question

I know when you reach the age of 70 1/2 in 2006, then you must make a required minimum distribution/withdrawal from the IRA by 4/1/07 and make an annual withdrawal after that. My questions are:

1) Can you calculate how much you need to withdraw for 2006 and 2007, and make one single withdrawal by 4/1/07 to satisfy the fact that you must make the first withdrawal for 2006 by this date, and a withdrawal for 2007?

2) If I purchase an annuity at a bank with my own money (non-employer related), do I need to follow this rule as well? What if I bought the annuity a few years ago and haven't reach the period for making withdrawals yet?

Answer 1

1) You can make a single withdrawal by 4/1/07 to satisfy the minimum distribution requirements for 2006 and 2007. Your 2006 RMD is based on the value of your account on 12/31/2005. Your 2007 RMD is based on the value of your account on 12/31/2006. You do not reduce the value of your account on 12/31/2006 by the RMD for 2006 if the withdrawal is taken in 2007.

2) The RMD rules do not apply to an after-tax annuity.

Answer 2

If you reached 70 1/2 last year, you will be required to take 2 withdrawals this year. The first by April and the next by the end of the year. Your RMD is calculated by adding ALL of your IRA end of the year values (excluding ROTH IRA's) and divided by the figure given by the IRS. I have enclosed a website link that will actually do the calculations for you. When taking your RMD you do not have to take it from each of your IRA accounts. You can take it out of one account or you can take it from several. You also do not have to take it at one time. You can set up a monthly systematic withdrawal to have it taken throughout the year. Some chose to take it quarterly or whenever they need the money throughout the year. Any withdrawals you take from an IRA account will go towards meeting your RMD. Hope this helps!

Answer 3

for knowing about the withdraw for 2006 and 2007 go for the tax filing web sites these will help you calculate and file the returns with deductions

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Answer 4

You need to make separate distributions for both years. You can purchase an annuity and do as you please unless you defer the earnings to qualify for a IRA, Keogh, SEP, or other qualified pension plan. They all require the 59.5 and 70.5 age rules.

Answer 5

RAs are the investment vehicles for IRA-based plans (e.g., SEP, SIMPLE IRA and SARSEP plans. All SEP-IRAs and SIMPLE IRAs are subject to the same investment rules as traditional IRAs. For more information on these types of plans

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Answer 6

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