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Confused about IRA withdrawals between 59.5 and 70.5
Old 12-13-2012, 03:55 PM   #1
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Confused about IRA withdrawals between 59.5 and 70.5

A coworker told me that once you start taking money from an IRA/401k, you MUST take distributions each year, going forward.

I can't find anything to confirm that - just a lot of stuff about RMD's once you reach 70.5yo.

Example: retiree is 61 and has an unexpected expense. For cash flow reasons they'd like to pay for that expense from IRA or 401k money. Since the person is over 59.5 - they can access the tax deferred money penalty free. Obviously, they'd be paying taxes on the withdrawal.

Does this trigger mandatory withdrawals for following years?

I think my coworker is wrong.. but I'd like to know if he's right, and I'm wrong. This will make a difference in our spend-down plans.
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Old 12-13-2012, 03:56 PM   #2
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Your co-worker is wrong.
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Old 12-13-2012, 04:02 PM   #3
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after 59 1/2 you can withdrawl without penalty (other than the taxes you owe). It does not trigger mandatory withdrawls for following years.

Mandatory withdrawls must begin at 70 1/2 and then occur yearly based on life expectancy at the time you turn 70 1/2.
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Old 12-13-2012, 04:04 PM   #4
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Your co-worker is wrong.
+1
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Old 12-13-2012, 04:08 PM   #5
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A co-worker told me that listening to financial advise given by co-workers is the leading cause of inadequately financed retirements today. If a co-worker told me, it must be true!
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Old 12-13-2012, 04:10 PM   #6
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Thanks.
Part of my confusion about this came from an article that stated
Quote:
(Tax rules require that once IRA withdrawals begin, they must continue.)
Coping with the financial toll of terminal illness - Dec. 13, 2012
That quote fails to mention that this is ONLY true if it's an inherited IRA/401k... different rules for inherited retirement accounts.
(The article is the follow up article to the one being discussed about end of life decisions/costs.)

I need to stop confusing myself. I was pretty sure I was right by so was my coworker (convinced he was right).
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Old 12-13-2012, 04:11 PM   #7
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A co-worker told me that listening to financial advise given by co-workers is the leading cause of inadequately financed retirements today. If a co-worker told me, it must be true!
Too true.
Same with financial advice from relatives. Or worse - financial advise from relatives based on something *their* coworker told them.

LOL
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Old 12-13-2012, 05:01 PM   #8
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Moral: Never get your financial advice from a cow orker.

It's bad enough the poor cows have to put up with it; there's no reason you should.
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Old 12-13-2012, 05:36 PM   #9
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I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.

What you were told is not so.
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Old 12-13-2012, 06:34 PM   #10
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I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.
+1
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Old 12-13-2012, 07:57 PM   #11
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Too true.
Same with financial advice from relatives. Or worse - financial advise from relatives based on something *their* coworker told them.

LOL
I hear you. 2 of my BILs sell life insurance and annuities.
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Old 12-13-2012, 08:50 PM   #12
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The RMD starting at 70.5 years old will be slightly less than 4% of the total asset within that IRA, so if you use the 4% rule, the RMD is automatically accounted for.
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Old 12-14-2012, 10:07 AM   #13
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Quote:
Originally Posted by Rustward View Post
I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.

What you were told is not so.
This is exactly what the guy was talking about, I bet. Those do have to continue. The 72T is the Substantially Equal Periodic Payments dealie.
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Old 12-14-2012, 03:55 PM   #14
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Rodi how old are you?
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Old 12-14-2012, 04:35 PM   #15
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This is exactly what the guy was talking about, I bet. Those do have to continue. The 72T is the Substantially Equal Periodic Payments dealie.
If I understand correctly, the 72-T distribution can be stopped after age 59.5 AND the distribution has been taken for a minimum of five years.
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Old 12-14-2012, 06:15 PM   #16
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Originally Posted by bondi688 View Post
The RMD starting at 70.5 years old will be slightly less than 4% of the total asset within that IRA, so if you use the 4% rule, the RMD is automatically accounted for.
but only for a few yrs?
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