Roughly 10,000 baby boomers turn 70 each day. That means they soon will have to take a required minimum distribution from their traditional IRAs and 401(k) plans.
The stakes are high for getting RMDs right.
If you don't make the appropriate withdrawals, you may have to pay a 50 percent tax on the amount that was not taken out as required. Generally, you have to start taking withdrawals from your traditional IRA, SIMPLE IRA, SEP IRA or retirement plan accounts when you reach age 70½. If you are still working, some 401(k) plans allow you to defer RMDs from those plans until you retire.
The prospect of tax reform can change the withdrawal calculation for many retirees. If you believe that Congress will cut taxes by next year, people who turn 70½ can defer their first required minimum distribution to 2018 when income tax rates could be lower, said Nick Jovanovich, a certified public accountant and partner at law firm Berger Singerman in Fort Lauderdale, Florida.