rule(s) pertaining to IRA minimum distributions af

L1: rule(s) pertaining to IRA minimum distributions afI will reach age 59&1/2 by February, 2007. I”m considering beginning to take minimum distributions from the largest of three IRA accounts. One of the previous posts seems to indicate I can set that amount for whatever$sum I prefer, and that the minimum distribution requirement does not kick in until I attain age 70&1/2. What is correct? Also, it appears to my CPA and myself, that by taking the minimum distribution, and providing the market generally returns a higher interest rate than the calculator presumes, the principal could well continue to increase (though at a slower rate) even though I”d be taking distributions. My financial advisor says I can also change the monthly distribution amount at any time. Is that statement correct? Thanks for any feedback.2006-12-19 16:31, By: bluegrass boy, IP: [209.209.140.21]
L2: rule(s) pertaining to IRA minimum distributions afHello Bluegrass:
Everything you said in your post is correct. Also, what your financial advisor and CPA are telling you is correct.
However, the issue you do not address is how this all fits into your general / multi-year financial picture. One way to think about your IRAs is that they are generally the same as any other asset but also contain an imbedded liability; e.g. everytime you take a distribution you must pay the tax. So, at least one objective is to minimize the amount of taxes paid. To do this, you need to do some multi-year planning and estimating and most likely targeting a range of taxable income for the next 10 years or so — then hit that range by making distributions potentially not spending it all but instead devoting some of those funds to ROTH conversions and/or stockpiling into after-tax accounts.
TheBadger
wjstecker@wispertel.net
2006-12-19 16:47, By: TheBadger, IP: [72.42.66.177]

L2: rule(s) pertaining to IRA minimum distributions afBetween age 59.5 and the year you turn 70.5, you can take as much or as little as you wish from your IRA accounts without an early distribution penalty or a penalty forfailing to take your RMD. In other words, no restrictions whatsover. This means there is no need for a 72t plan unless you need to complete a plan started in the past to meet the 5 year requirement.
Even when you reach 70.5, your first year RMD is only 3.65% of your prior year end balance, so it does not take impressive investment returns to grow the principal for a fewyears before the RMDs become much larger.
Note that if you have an inherited IRA from a non spouse, RMDs begin not at 70.5, but the year after you inherit the account. 2006-12-19 16:52, By: Alan S., IP: [24.116.66.98]

L2: rule(s) pertaining to IRA minimum distributions afTheBadger and Alan S. have answered your questions quite well.I would like to add some comments on two items from a planner”s prospective for you to focus on; 1) distribution planning and 2) beneficiary designation.
Since you are planning to wait until after your actual age of 59 1/2 to begin IRA distributions, I see no reason for you to even consider starting a 72(t) program. But you and your financial advisor should focus on building a solid portfolio for growth and income with a withdrawal rate of 5% or less. If you want some guarantees, then you might consider a variable annuity with living benefit riders that don”t require annuitization. Keep an open mind and review what”s available, and if you like it then consider this option for some of your assets.
Alan”s last sentence hits the tip of the iceburg of a very important aspect of IRA planning … beneficiary designations. This is such an important aspect and has so many twists and turns that it is way beyond the scope of this post to cover everything. Get with your financial advisor to discuss this at length. Ask to borrow his copy of Ed Slott”s book, “The Retirement Savings Time Bomb …” and study death distributions. In fact, the book is a great reference for everything about IRA”s.There is a link on this site for your convenience.
Good luck.
Jim2006-12-20 14:07, By: Jim, IP: [70.184.2.72]