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For people who participate in retirement plans, age 70-1/2 has long been an important milestone. But recently, the rules in this area have changed. Here’s a quick review of the current situation.
As a general rule, you still must take your first retirement plan payout when you reach age 70-1/2. Actually, the law gives you. some leeway, and you have until April 1 of the year following the one in which you turn 70-1/2 to take your first distribution.
To illustrate, suppose you were bom Jan. 2, 1928. You will turn 70-1/2 on July 2, 1998, so you have until April 1, 1999, to take your first distribution.
Recently, two major exceptions have been added to this general rule:
* Owners of Roth IRAs are never required to take mandatory distributions.
* If you are still working at age 70-1/2, you may be able to wait until April 1 of the year after your retirement before taking distributions from your employer’s qualified retirement plan. The administrator of your plan can tell you if this feature is available.
This new exception does not apply to regular IRAs, SIMPLE IRAs, or Simplified Employee Pensions (SEPs).
If you have relatively large balances in your retirement plans, you’ll be pleased to
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