The Wall Street Journal
Wealth Management – January 16, 2017
Pulling Retirement Cash, but Not by Choice
Baby boomers’ mandatory withdrawals from 401(k)s, IRAs and other tax-deferred retirement accounts start in full force this year, touching off a massive shift of cash
By Vipal Monga and Sarah Krousea
The largest generation in U.S. history has to start pulling its retirement money this year, kicking off a mandatory movement of cash that could total hundreds of billions in the coming decades.
U.S. law generally requires anyone age 70½ or older to begin annual withdrawals from their tax-sheltered retirement accounts and pay taxes on those distributions.
On average, men and women who turned 65 in 2015 can expect to live a further 19 and 21.5 years respectively, according to the U.S. Social Security Administration’s most recent life-expectancy estimates; those post-65 expectancies are up from 15.4 and 19 years for those who turned 65 in 1985.
Jack Weaver, a retired biopharmaceutical-product developer, turned 70 in late 2015 and had to pay taxes on his first required payout of $31,000 last year. “It’s unwanted income,” he said. He reinvested the money and says his wife plans to do the same when she takes her first distribution this year.
Comments January 16, 2017
According to the article, “U.S. law generally requires anyone age 70½ or older to begin annual withdrawals from their tax-sheltered retirement accounts and pay taxes on those distributions.”
Avoid Taxes Completely by Working or Returning Back to Work and Leaving Money in Your 401(k), Roth 401(k), 403(b), Roth 403(b), 457(b) or Roth 457(b)
If you are still working or return to work beyond the age of 70 ½ (when Required Minimum Distributions (RMDs) normally begin) and you participate in one of these plans, you are exempt from RMDs on those balances (as long as you do not own more than 5% of the employer sponsoring the retirement plan).
We address this tip and nine others in the following article:
Aaron Skloff, AIF, CFA, MBA
CEO – Skloff Financial Group
Aaron Skloff, Accredited Investment Fiduciary (AIF), Chartered Financial Analyst (CFA), Master of Business Administration (MBA), is the Chief Executive Officer of Skloff Financial Group, a Registered Investment Advisory firm. The firm specializes in financial planning and investment management services for high net worth individuals and benefits for small to middle sized companies. He can be contacted at www.skloff.com or 908-464-3060.