Have You Taken Your 2013 Required Distribution from Your IRA?

Published on February 7, 2014

Have You Taken Your 2013 Required Distribution from Your IRA?Although you may start taking distributions from your IRA without penalties starting at age 59-1/2, you are required to take these annual disbursements upon turning 70-1/2 years of age.

These distributions from your retirement accounts are taxable income in the year those funds come out of the account. So if you missed your 2013 distribution and are taking it this year (2014), this amount must be included in your 2014 income and noted on your tax return. However, if that distribution was made by your retirement account on the last day of the year (December 31, 2013) and you received it in the first few days of 2014, it is considered 2013 income.

In cases where the account holder passed away before taking all of the required distribution, the remaining unpaid amount is paid to the beneficiary. As always, it is best to check with your accountant or tax advisor about these matters.

You don’t necessarily get off without a penalty, however; a missed distribution carries a 50% penalty of the amount not taken, so it’s best to be proactive, figure out what you need to take every year once you reach mandatory age, and work out a distribution schedule if applicable. FINRA (Financial Industry Regulatory Authority) has a calculator. The IRS website, www.irs.gov has the form that you are required to file for the penalty; click on the Forms and Publications button.

 

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