Mark D. Goldstein®
Certified Financial Planner
SAFE-Money Alliance

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1100 S. Main St., Suite 10
Las Cruces, NM 88005
(575) 556-2472

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7362 Remcon Circle
El Paso, TX 79912
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Rolling Meadows, IL 60008
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A reader writes...

“Mark, I’ll be turning 70 in July and have two IRAs. One of them is in a CD at the bank. It’s small, but enough to cover my total IRS required minimum distributions. The other IRA is in a brokerage account and it’s worth a lot more money.

"So, the question is, if I withdraw the entire CD, does that satisfy the required minimum distribution for BOTH accounts?”

Well, my friend, assuming your math is correct, the answer is "YES". But let’s look more closely, shall we?

First of all, if you turn 70 this July, you won’t have to withdraw a single dime from any IRAs this year. Not even next year.

In fact, the law says you can wait until April 1st (not the 15th!) of the year after the year in which you turn 70½ (leave it to our government bureaucrats to conceive of something this goofy!). Since you'll reach 70 this July, you’ll be turning 70½ in January of 2019. That means you won’t have to make your first required withdrawal until April 1, 2020.

If you’re still with me, you’re an absolute genius!

However, we’re not done. I need to add a few more facts to further confuse you…

1. If you decide to wait until April 1, 2020, you’ll have to make TWO withdrawals that same year; one for 2019 (that you delayed until 4/1/2020) and another by December 31, 2020 (for the current tax year).

Just be aware that all withdrawals are fully taxable, so making two in one year could push you into a higher tax bracket than if you spread them out over two tax years. On the other hand, the higher tax bracket you’d incur in one year might be offset by a lower tax bracket you’d enjoy in the other year… meaning that two distributions in one year might actually be better than one in each of two years. But then, again, blah, blah, blah…

2. The minimum amount you must withdraw is based on IRS life expectancy tables. That amount is based on your age (life expectancy) and on the age of your spouse if there’s more than a 10 year difference in your ages. It’s an annually increasing percentage of your total IRA dollars as of December 31 of the previous year… not the value of your IRAs on the date you actually make the withdrawal.

If you’re still following this madness, you're either a CPA or "Rain Man!"

3. The IRS doesn’t care how many IRAs you have. Those bloodsuckers just want to know the total value of all of them put together and they want you to withdraw at least the minimum required by the deadline.

So, YES, you can withdraw the money from just one IRA to cover all of your IRAs, as long as the amount you withdraw is enough to cover the minimum required for all of your IRAs.


4. One more very important caveat: You must withdraw the minimum required amount from each TYPE of retirement plan. An IRA is different from a 401(k), which is different from a 403(b), TSP or a 457 plan.

If you have money in both an IRA and a 401(k), you can’t just take money from the IRA to cover the value of the 401(k). You’ll need to take separate withdrawals from each type of account.

Please Note: If you screw any of this up… taking the money too late, withdrawing too little, or failing to withdraw from the proper accounts… you’ll not only have to pay the tax… you’ll also owe a 50% penalty on the entire amount that you should've withdrawn, but didn’t!

Mark’s Opinion: All these crazy rules are purposely designed to trap you. They are deliberately made complicated and designed to increase government revenue. They are obscene, absurd, obnoxious and indefensible.

But you either obey them or suffer the consequences.

Or open your mind to existing alternatives :^)