IRA Rollover & RMDs

Investment & Insurance Services

IRA Rollover & RMDs

Perhaps one of the most complex and confusing areas in retirement accounts are the individual retirement accounts, IRA’s. The rollover rules are constantly changing and if not adhered to can cost a taxpayer significant financial losses. At LBO, we can help guide you though this maze.

Rollovers

The basic rollover is the 60 day rule, which allowed for withdrawal and return without tax consequences. Initially this rule was rather strict, but over the last several years many 60 day rollover relief rulings have been forthcoming.

Another rollover is the movement of qualifying plans such as 401k into an IRA. Once you leave a job or retire you need to decide what to do with your retirement plan. Since company’s plan investment choices are usually restricted it pays to rollover to your own IRA.

Spousal & non-spousal rollovers have rules that must be followed exactly to achieve the end results of stretching those inherited funds. The Pension Protection Act of 206 contains the most change to US pension rules in over 30 years.

Required Minimum Distributions

For most IRA owners, required distributions must begin by April 1st of the year following the year you turn 70 ½ years old. Since 2001 RMDs have been based on a new Uniform Distributions Table. If you have multiple IRA Accounts you must compute the required distribution separately for each account, but the required amount can be taken from any account.

It is important not to forget your RMD! There is a 50% penalty on the amount that you should have withdrawn, but did not.