With trillions of dollars in assets, IRAs have proven themselves to be a popular and effective way to save for retirement. Eventually, however, you will need to start taking some money out of (and paying taxes on) your IRAs.
The IRS requires that you take a minimum distribution from your IRA and other retirement accounts every year starting no later than April 1, of the year after the year you turn age 70 1/2. This means if your birthday was on or before July 1.
Most IRA custodians will do this calculation for you, but for planning purposes it can be helpful to estimate in advance what your Required Minimum Distribution (RMD) may be. Although you may take your entire IRA RMD from one IRA or a combination of them, you will need to tally up the year end balances for ALL your IRAs in order to do an accurate calculation.
Lynn O’Shaughnessy, author, journalist and national college planning expert, recently wrote about the recent college admissions scandal involving wealthy parents who skirt the rules to get their kids into the country’s most prestigious schools.