BOSTON (CBS) – You can always get at your money in an IRA. But because the IRS and Congress allowed a deduction and tax deferral, they will not be happy if you do before age 59½ and will slap you with a 10% penalty plus taxes. If you wait until age 59½ you can get the money without the penalty but you will still owe the taxes.

But if you don’t need the money at 59½ you can leave it in the IRA hopefully still growing until you are 70½.

Minimum required distributions known as MRDs normally must begin at age 70½ for all of your IRAs except the Roth.You must generally start receiving distributions from your IRA by April 1 of the year following the year in which you reach age 70½.

The distributions are based on your life expectancy using an IRS table, the Uniform Lifetime Table found in the IRS publication 590. You may be sure you’re going to live to be 110, but the IRS’s actuaries have different ideas.

Don’t mess with the minimum required distribution. If you are late in taking that first distribution, there is a 50% penalty on the amount of the required minimum distribution.

The MRD is not a lot of money we are talking about having to withdraw. If you have $100,000 in your account, and I use that number because it’s easy to do my calculations, and you turned 70½ you would be required to withdraw less than $4,000 the first year.

If you have multiple IRAs, you must use the combined value to determine the minimum distribution. You need use only one account to withdraw funds from though.

But to make life easier especially the bookkeeping part consider consolidating your IRAs and your retirement plans into one account. Getting one monthly statement instead of four or five will definitely make life simpler.

If you need help in making your decision a trusted advisor is the only way to go. You may need to seek out a certified financial planner (CFP) or a CPA to help.


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