Retirement - Keep More Of Your Savings



I thought I’d share this interesting AARP Bulletin article regarding saving money in retirement by giving less to the IRS after you turn 70 1/2.

The articles explains steps to take to avoid costly mistakes, including very large penalties for not taking money out when required.

It further explains that people in the 60’s should already be planning ways to minimize taxes in their 70s and suggests ways to accomplish that.


Excerpts: 

"Starting mid-2016, the oldest boomers will begin turning 70 1/2. That's the magic age when workers who have been socking away money in tax-deferred retirement accounts for decades must begin taking cash out. The withdrawals are called required minimum distributions, or RMDs. And they are Uncle Sam's way of finally collecting income taxes on contributions and investment gains that have been long sheltered from the IRS. Investors failing to take RMDs will owe a stiff penalty amounting to half of what they should have withdrawn.”1

"Basically, after 70 1/2 you must withdraw a minimum sum each year from tax-deferred accounts such as traditional IRAs, SIMPLE and SEP IRA plans, 401(k)s, nonprofit 403(b)s and government 457 plans.

Roth IRAs, whose contributions have already been taxed, don't have RMDs. And if you're still working in your 70s and have a 401(k) or similar plan with that employer, you don't have to take distributions from that account until you leave the job.”2


To read the full article click on the link below:

http://www.aarp.org/work/retirement-planning/info-2016/how-rmds-affect-retirement-savings.html


1. & 2. Source: AARP Bulletin March 2016 by Eileen Ambrose


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