William Penn Life, 2012 (47. évfolyam, 1-12. szám)

2012-01-01 / 1. szám

Annuity Essentials by Debbie Evans

Required minimum distributions

Making sure your IRA meets IRS regulations

IF YOU ARE NEW in 2012 to Required Minimum Distributions (RMDs), we would like to provide you with some basic information to help you understand this IRS regulation requirement.

Traditional IRAs encourage tax-deferred retirement savings. However, IRA owners cannot shelter these funds from taxes indefinitely. One of the main purposes of a Traditional IRA is to provide a retirement income for the IRA owner, and the RMD rules are designed to promote the use of the funds even if the IRA owner is not retired or in need of the funds.

If you will be 70% in 2012—born between July 1,1941 and June 30,1942—you must arrange to receive your RMD. Pay close attention to your mail for a statement from your IRA custodian. This must be mailed to you no later than Jan. 31.

It will inform you that your RMD is required for the year and the due date. It will also say that this information is being reported to the IRS. In addition, this statement will either specify the RMD amount and the date by which it must be taken or include an offer to calculate the RMD upon request.

RMDs are determined by taking the Traditional IRA balance as of Dec. 31 of the prior year and dividing that figure by the appropriate "life expectancy factor" (which are provided by the IRS). The IRA owner may always take more than his RMD requirement. However, for any year the Traditional IRA owner takes more than his RMD,

no credit will be given to reduce an RMD in a later year.

If an individual owns more than one IRA, the RMD must be calculated separately for each IRA, but the total may then be taken from any one or more of the IRAs. Should you elect to deplete your accounts one at a time, look at all of your accounts' interest rates and start with the account paying the lowest interest rate. However, always check the individual penalty clauses on each contract, if any, to make an informed decision. □

Debbie Evans, FIC, is WPA's Annuity Specialist. You can reach Debbie at 1-800-848-7366, ext. 127, or by email at devans@williampennassociation.org.

To learn more about the potential financial benefits of Section 1035 exchanges and how a William Penn Association Tax-Deferred Annuity can benefit you and your financial future, contact your local WPA representative or our Home Office toll-free at:

1-800-848-7366

4 0 January 2012 0 William Penn Life