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Are You the Beneficiary of an IRA? You May Need to Take a Required Minimum Distribution

Posted by Michael J. O'Connor | CWS®, Vice President Investments

December 6, 2017

When most investors/retirees think of Required Minimum Distributions (RMDs), they think of turning 70 ½ and having to take mandatory distributions from an IRA. The federal government allows savers to make tax deductible contributions (with tax deferred growth) to IRAs/401(k)s/qualified retirement plans throughout their working lives, but the party ends when folks turn 70 ½. Uncle Sam eventually gets his cut.

There’s one feature of RMDs, however, that is less widely known. That is, if the account owner passes away and there is still a balance in the qualified retirement account, it is the responsibility of the beneficiary to take the required distributions, whether that be the spouse, a child, a charity, a trust, and so on. Not taking the required distributions can result in a 50% excise tax penalty on the amount not withdrawn, so it’s important to understand these rules. We’ll break them down more clearly for you, below.

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RMD IRA Beneficiaries

Tax Planning: Don’t Forget Your Required Minimum Distributions

November 15, 2017
Republicans on Capitol Hill are currently working to make major changes to the tax code, but one tax rule does not seem likely to change ... [+] Read More