August 23, 2016. By Lori Patterson:

It is hard to believe another summer will soon be behind us and the fall season is a mere weeks away.  As it adds color to our landscape, the autumn also adds various tasks to our already busy schedules, hectic holiday planning, and looming year-end activities.  I know I am already thinking about my list of items to complete in the last quarters of 2016.

If you are age 701/2 or older, you may also have to add scheduling your Required Minimum Distribution (“RMD”), to your year-end checklist.  Required Minimum Distributions from your individual retirement account or employer sponsored retirement plans are required by the IRS annually once you turn 701/2.   Among other reasons, RMDs are enforced to ensure that investors are not postponing tax payments indefinitely.

Multiple factors are considered to calculate the amount of your RMD, including estimated distribution period and life expectancy. The IRS provides several helpful worksheets, however even these can seem difficult to navigate, especially since requirements may vary according to the type of retirement account you hold. If your distribution amount is calculated incorrectly, you could incur penalties of up to 50% of the amount not taken.  In addition, the distribution will be taxed as income unless taken as a Qualified Charitable Distribution, so you will want to incorporate this annual income into your tax strategy. Consult your investment advisor and CPA for the exact procedure and amount that is right for you.

Are you a Centerpoint client who fits the RMD criteria? Do not hesitate to contact us with any questions regarding when and how to check this item off of your list.