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#### QUIZ

Are You Prepared for Taxes in Retirement?

# Dealing With Required IRA Distributions

If you don't withdraw the right amount of money -- and do so by the deadline -- you'll be hit with a big penalty.

I turned 70#189; last year and took my first IRA required minimum distribution this April. A friend of mine told me that I'd have to take another distribution by the end of the year. Is this true? Why is that the case?

Your friend is right. You don't need to take your first IRA distribution until April 1 of the year after the year you turn 70#189;. That's considered your distribution for age 70. But you'll also have to take your distribution for age 71 in that year, too, which you must do by December 31. After that first year, you must make all required minimum distributions by December 31. If you don't withdraw the right amount of money, you'll have to pay a 50% penalty on the amount of money you should have withdrawn but didn't.

To calculate how much money you need to withdraw, take the balance of your IRA accounts as of December 31 of the previous year and divide it by the number you'll find in the IRS tables for someone your age. You can figure out how much you need to withdraw by using our Calculate Your Minimum Distribution calculator, or use the tables at the end of IRS Publication 590 (you'll need to use a different table at the end of that publication if your beneficiary is a spouse who is more than ten years younger than you).

Do the same thing by December 31 the following year, based on the previous year's account balance and the IRS divisor based on your new age.

These rules only apply to traditional IRAs. You don't need to make any required minimum distributions from Roth IRAs.

### Distribrutions from several IRAs

I have several IRAs. Can I satisfy the minimum distribution requirement from only one IRA instead of taking the money from each one?

Yes. Even though you'll need to calculate the required minimum distribution from each IRA, and then add them all up, you can take the money from whichever one you want.

Withdrawals are fully taxable if all of your money is in tax-deductible IRAs. If some of your money is in nondeductible IRAs, then a portion of your withdrawals will be a tax-free return of principal, while the earnings (and tax-deductible contributions) will be taxable.