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As you age, the rules for withdrawing money from your IRA change. For many years, retirees had to start withdrawing money after age 70 1/2. Under new rules, you must start taking required minimum ...
For example, let’s say your RMD should be $20,000 and you withdraw only $10,000 — you would be given a $2,500 penalty. You would still be liable for the tax on the full $20,000.
3. Workplace retirement plans have an RMD exception. If you have a retirement plan at work, such as a 401(k) or 403(b), there’s an important RMD exception.
Generally, if you withdraw money from a 401(k) before the plan’s normal retirement age or from an IRA before turning 59 ½, you’ll pay an additional 10 percent in income tax as a penalty. But ...
Once you turn age 73, you have to start taking required minimum distributions – known as “RMDs” – from all of your traditional retirement accounts, including IRAs and 401(k)s.
If you don’t hit your RMD for the year, the IRS can take a hefty 25 percent of the amount that you should have taken but didn’t. Keep this money in your pocket by taking your RMD on time. 4.
Key Points. Although 60 isn’t such a young retirement age, your savings may need to last a bit longer. The 4% rule may be a bit too aggressive if you start tapping your nest egg at 60.
Using your IRA funds to pay for health insurance after losing your job Spending up to $10,000 on a first-time home purchase Spending up to $5,000 on birth or adoption costs
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