Required Minimum Distribution (RMD) Part 2: When to take your First Distribution

Now that you know we have to take a Required Minimum Distributions (RMD) again this year (2010), and why; see our prior post for greater details, here is an important item for first time RMDers (just reaching 70 & 1/2). 

First time RMDer’s, be careful or you may end up with two mandatory distributions in the same year.

Again from the IRS Website.

“However, the first RMD payment can be delayed until April 1st of the year following the year in which he or she turns 70 ½.”

Careful with this deferral of your RMD, while it may sound good to delay until the last-minute this will result in two distributions in the same year.

Rarely does it make sense to knowingly pay taxes earlier than necessary, but in this case investors may want to review their tax brackets and make sure two distributions in the same year will not cause adverse tax consequences.

When delaying making your first RMD distribution, make sure you look ahead for a possible double year RMD or consider taking your first RMD early.

Have a Good Day!


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