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Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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Distribution Deadline Looms for Older Investors

Learn more about a rapidly approaching deadline for older investors with most types of retirement accounts.

| BY Adriana Reyneri

Investors who turned 70 ½ in 2012 face a special deadline of Monday, April 1 for taking the first year of required minimum distributions from many types of retirement accounts, according to an Internal Revenue Service reminder issued today.

The deadline applies to older investors with traditional individual retirement accounts, or IRAs, and to most workplace retirement plans, including 401(k) defined contribution plans, but not to Roth IRAs, according to the IRS. In subsequent years, the required minimum distribution must be made by December 31. As a result, taxpayers who turned 70 ½ in the last calendar year must take required minimum distributions on April 1, 2013, and again on December 31, 2013.

“The IRS encourages taxpayers to begin planning now for any distributions required during 2013,” the tax agency said in a statement.  Older investors with traditional IRAs must calculate the required minimum distribution separately for each account, but may withdraw the total from one or more of their accounts. Similar rules apply for investors with more than one 403(b) contract. In contrast, required minimum distributions must be calculated separately and withdrawn separately from 401(k) and 457(b) plans. Distributions are taxed at the individual taxpayer’s rate.

Tax consequences are one of the top considerations of high net worth investors.

Investors who fail to comply with the rules face stiff penalties. Minimum distributions not withdrawn by the applicable deadline are taxed at 50 percent, according to the IRS. Minimum distributions are calculated based on an older investor’s life expectancy as of December 31, 2012, and their account balance as of December 31, 2011. Worksheets and tables are available on the IRS website.

Some older investors who have not yet retired may be able to postpone the year they begin receiving required minimum distributions from a workplace retirement plan, according to the IRS. “Usually, employees who are still working can, if their plan allows, wait until April 1 of the year after they retire to start receiving these distributions,” the IRS said. 

Learn more about the tax-advantaged investment strategies of high net worth investors.

In 2013 the IRS offers older investors the option of using a charitable donation – made directly from an IRA to a qualified charitable organization – to meet part or all of their required minimum distribution up to $100,000.