IRA and Qualified Plan Required Minimum Distributions – 12/31 Deadline is fast approaching.

Are you at least 70 ½ years old and hold assets in a Qualified Plan or IRA?  If so, you must begin taking the required minimum distributions before year end in order to avoid a 50% penalty on the amount that should have been taken out. If  this is your first year to start distributions, there is an extension until April 1 of 2011. Before deferring into the next year though, be sure to discuss possible tax consequences with your advisor.

Here is a quick review for those that are new to retirement account distribution planning.  Per IRS regulations you must take a minimum amount out of your IRA accounts each year after you turn 70 ½.  If you are still working, you can defer distributions from your employer’s plan until you terminate service.  However, even if you are still working, you must start distributions from any IRA accounts. Also, If you inherited an IRA, there are special distribution rules to consider.

When it comes to retirement money the rules are complex, and Uncle Sam anxiously awaits these taxable distributions -- and the mistakes that people unknowingly make. If you make a mistake, and many do, Uncle Sam is smiling because all that money will be taxable.  Consult your advisors before taking money from retirement accounts, and do make sure that the minimum amount required is distributed by year end to avoid a costly penalty. After all, it is about how much of your money you keep that is most important.

Get some advice:  It is a good idea to sit down with a tax professional or financial adviser – such as a CERTIFIED FINANCIAL PLANNER™ professional -- to discuss your retirement distributions. Contact Julie Finney, CFP®, Wealth Management Advisor with PSA Financial Advisors, Inc. for a consultation.

This material is generic in nature and is not intended to replace the advice of a qualified advisor, nor is it a recommendation of any particular strategy.  Products or strategies mentioned do not consider your particular financial situation.  Please consult your advisor prior to acting on any information referenced.  Financial planning services offered through PSA Financial Advisors, Inc 800-677-7887

Julie Finney, CFP

T: 443-798-7421
Em: julief@psafinancial.com

Area of Specialty:
Comprehensive financial planning, retirement planning, education planning, investments, insurance and estate planning.  (More)