Mandatory withdrawal from my IRA

[Netteburg]

What would be the best way to withdraw money from my IRA when it is mandatory when I turn 70-1/2 years old? Thanks for your help

[Opus 17]

I don't understand the question.  You have to take the funds out of the account.  Usually the plan trustee will send you a check or make an electronic deposit to your bank account.

In some cases, you might be able to transfer stock or other securities from your IRA to a regular broker account, but you will still pay regular income tax based on the market value of the assets on the day of the transfer.  You're going to pay the tax no matter what.    What you do with the money after that doesn't change the tax you pay on the withdrawal. 

[VolvoGirl]

You mean like take it out once a year or monthly?  That is a personal choice.  I saw a big discussion on that in another forum.  Some people want to try to time the market. If you have a financial or investment advisor talk to them.  I take mine once a year. And don't wait to the end of the year in case something happens and it doesn't get done or processed in time.

[Netteburg]

Thank you for your reply! I also would like to know how much or how big is the percentage of the  withdrawal I have to make and is there a tax break if I should donate to my church? What is an RMA? Thanks again

[DoninGA]

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

 If you reached the age of 70½ in 2019 the prior rule applies, and you must take your first RMD by April 1, 2020. If you reach age 70 ½ in 2020 or later you must take your first RMD by April 1 of the year after you reach 72.

[Netteburg]

Thank you for your reply! I also would like to know how much or how big is the percentage of the  withdrawal I have to make and is there a tax break if I should donate to my church? What is an RMA? Thanks again

[Netteburg]

I don’t have a financial advisor. So I have to make a withdrawal every year?

[Netteburg]

I don’t have a financial advisor. So I have to make a withdrawal every year?

[Opus 17 · Accepted solution]

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@Netteburg wrote:

I don’t have a financial advisor. So I have to make a withdrawal every year?

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RMD means "required minimum distribution."  The general idea is that retirement accounts like 401(k)s and IRAs were created to support your retirement, and not just to hold funds that you will pass to your kids tax-free when you die. So the rules require that you withdraw at least some money from your account each year after you turn 72-1/2 (there was a recent law change on that.)

The amount is based on the value of the account and your life expectancy.  It's around 4-5% of the account balance for most people.   You can withdraw more, of course, but if you don't withdraw at least the minimum amount each year, you will pay a 50% penalty on what you should have withdrawn.

The bank or broker that manages your IRA or 401(k) can tell you what your RMD is each year. 

[DoninGA]

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@Netteburg wrote:

I don’t have a financial advisor. So I have to make a withdrawal every year?

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The RMD is required each year.  The plan administrator for the IRA should be able to calculate the RMD and send the funds to you.  You just need to contact the plan and tell them when you want the RMD to start.

I have mine distributed on the same day of the year, each year.

You will receive a Form 1099-R in January of each year for the withdrawal.  The tax data on the 1099-R is reported on your tax return.