Timing Your IRA Withdrawal at 70 1/2

If you will turn 70½ this year, you have until April 1 of next year to start taking required minimum distributions (RMD) from your individual retirement account and any “orphan” retirement accounts you may have left with previous employers.

But waiting could have tax consequences for some people.  For example, taxes could go up next year.

The second problem is that if you move the first RMD to the following year, you also have to take a second distribution for that year since there is no further grace period.   You will be paying taxes on two distributions which could put you into a higher tax bracket.

If you do decide to defer the first RMD until the following year, consult your tax adviser and your financial planner.  And keep in mind that your quarterly tax payment should reflect the added income.

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