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IRA cash available before age 70½


Don Taylorq_v2.gifDear Dr. Don,
I turn 70½ in November 2011. Can I take out a withdrawal in January 2011 from my IRA account and have it count for that first required withdrawal, or RMD?
-- Jerry Jump-start

a_v2.gifDear Jerry,
No problem. You turn 70½ in 2011, so a distribution from your individual retirement account taken in January 2011 is in the year you reach 70½. The last possible date to take your first distribution is April 1, 2012 -- which is also known as your "required beginning date" -- but the first date is Jan. 1, 2011.

Here's how the Internal Revenue Service presents it in Publication 590, "Individual Retirement Arrangements."

Distributions by the required beginning date.
You must receive at least a minimum amount for each year starting with the year you reach age 70½ (your 70½ year). If you do not (or did not) receive that minimum amount in your 70½ year, then you must receive distributions for your 70½ year by April 1 of the next year.

It's important to note that only the first required minimum distribution can be delayed until the following April. After that, subsequent annual RMDs have to be distributed out of the IRA account by Dec. 31 of that year. Your 2011 distribution can wait until April 1, 2012, but your 2012 distribution has to take place by Dec. 31, 2012.

If your 70th birthday is on or before June 30, you turn 70½ the same year you turned 70. If you turn 70 after June 30, you turn 70½ in the following calendar year. You state that you will turn 70½ in November 2011, so you will turn 70 in May of that year.

Bankrate's Required minimum distribution retirement calculator can help reveal your RMD. Remember that in taking your RMD in January 2011, the RMD is based on the account's ending value as of Dec. 31, 2010. You may have to wait a day or two to get that information from the account custodian.

Bankrate's content, including the guidance of its advice-and-expert columns and this Web site, is intended only to assist you with financial decisions. The content is broad in scope and does not consider your personal financial situation. Bankrate recommends that you seek the advice of advisers who are fully aware of your individual circumstances before making any final decisions or implementing any financial strategy. Please remember that your use of this Web site is governed by Bankrate's Terms of Use.

To ask a question of Dr. Don, go to the "Ask the Experts" page, and select one of these topics: "Financing a home," "Saving & Investing" or "Money." Read more Dr. Don columns for additional personal finance advice.

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