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Deductibility Limits on Traditional IRA Contributions & IRA Contribution Limits from 2002 to 2012
Hardship Withdrawals and Accessing 401(k) Loans
401(k) Rules – Contribution Limits, Catch-Up Contribution Rules, Vesting Rules, 401k Eligibility Rules
Salary Deferral Contributions Made to 401(k) Retirement Account
Important Year End Statements for Individual Retirement Account (IRA) Holders
5 Things Every 401(k) Plan Should Have
The Roth 401(k) – How After-Tax Contributions Work, Comparisons with Roth IRA, Future Tax Rates, Contribution Limits & Frequently Asked Questions
What is a Traditional IRA? History of IRAs, Eligibility Requirements, Ineligible Compensation, Distributions from a Traditional IRA & How Income Tax Deductions Work
How to Invest in Real Estate using your Individual Retirement Account (IRA)
Rolling your 401(k) – Trustee to Trustee Direct Rollover, Modified Adjusted Gross Income (MAGI) Income Limits for Deductible Contributions to a Traditional IRA
401(k) Vesting – How It Works, Vesting Schedule, Number of Years of Service
401(k) Lump Sum Distributions – Tax Advantages, Rollover to IRA, Tax Deferred Contributions and more
401k Rollovers to an Individual Retirement Account (IRA) – Things to Consider Before You Rollover, Avoid Transfer Penalties, Move Employer Stock, etc.
401(k) Withdrawals – Early Withdrawal Penalties, Rollover Withdrawals, Exceptions and Tax Consequences
Understanding the Rules for Participating in a 401(k) Plan, Beneficiary Appointment, 401(k) Plans for High Paid Employees

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Required Minimum IRA Distribution Calculator - 401k Calculators

(August 1, 2011)

The IRS requires that you must withdraw the required minimum distributions from your IRA or 401(k) account from the age you turn 70 and 1/2 years old. The reason for this, well the IRS wants to generate tax revenue, thus when you withdraw funds from your IRA that was growing tax-deferred, you will have to pay taxes upon the minimum required distribution. Determining exactly how much is required to be distributed as minimum is very important to know, as the penalties for doing it wrong are severe. You can use the calculator linked below to calculate exactly how much required minimum distributions you might have to take out.

Go here to access this calculator:

To test this calculator, here's a hypothetical calculation I did:

Account balance as of 12/31 of year prior to distribution year $1,500,000
Your age as of 12/31 of distribution year 75
Beneficiary age 60
Estimated rate of return 5%
Is your birthday after June 30th? No
Is your sole beneficiary a spouse? Yes
Answer: Your minimum required IRA distribution is $56,603.77

Your minimum distribution was based on a 26.5 year life expectancy. Minimum distributions are calculated by taking your account balance on December 31st of the preceding year and dividing it by your life expectancy. Of course, you have no required minimum distribution until you have reached an age of 70 1/2.

Answer: Your minimum required IRA distribution is $56,603.77

Your Age / Beneficiary's Age
Joint Life Expectancy
Required Minimum Distribution
Remaining Balance
75/60 26.5 $56,603.77 $1,518,396.23
76/61 25.6 $59,312.35 $1,535,003.69
77/62 24.7 $62,145.90 $1,549,607.98
78/63 23.8 $65,109.58 $1,561,978.79
79/64 22.9 $68,208.68 $1,571,869.05
80/65 22.1 $71,125.30 $1,579,337.21
81/66 21.2 $74,497.04 $1,583,807.03
82/67 20.4 $77,637.60 $1,585,359.78
83/68 19.5 $81,300.50 $1,583,327.27
84/69 18.7 $84,669.90 $1,577,823.73
85/70 17.9 $88,146.58 $1,568,568.34
86/71 17.1 $91,729.14 $1,555,267.61
87/72 16.4 $94,833.39 $1,538,197.61
88/73 15.6 $98,602.41 $1,516,505.08
89/74 14.9 $101,778.87 $1,490,551.46
90/75 14.2 $104,968.41 $1,460,110.62
91/76 13.5 $108,156.34 $1,424,959.81
92/77 12.8 $111,324.98 $1,384,882.82
93/78 12.1 $114,453.12 $1,339,673.85
94/79 11.5 $116,493.38 $1,290,164.16

WealthCycles.com - Gold & Silver Investing News

* Notice the joint life expectancy after the age of 70 and 1/2 years is about 26.5 years, which adds up to (70.5 + 26.5 = 97 years).

** Also notice that the required minimum distribution increases each year after the age of 70 and 1/2 years by almost $3000 a year going up to $4,000 in later stages of the joint life expectancy.

*** It is interesting to note that at the age of 94, the investor in this case will have a remaining balance of $1,290,164.16 (a good chunk of cash) after having withdrawn quite a fair chunk of minimum distributions. It is important to point out that this is made possible with years and years of compounding interest, that really builds up power.


 

 


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