Required minimum distributions from retirement plans are back for 2010. After a one-year hiatus, taxpayers age 70½ and older (and those who inherited a retirement account) are again required to take taxable annual distributions. 2010 distributions must be taken by December 31 or a 50% penalty could apply.
If you turn 70½ this year, you could wait until April 1, 2011, to take your first distribution. In deciding, consider the likelihood of higher tax rates next year and the fact that a delay means you’ll have two taxable distributions for 2011.
Don’t leave your decision until the last minute. Your plan trustee will need time to execute your instructions. For assistance in reviewing your options and the tax consequences, give us a call.