| After you reach the age of 701/2 years the IRS | | | | placed in a higher tax bracket when you reach 701/2 |
| mandates that you begin to take an annual RMD from | | | | years, because of the RMD rule, it may well be a good |
| you traditional IRA or employer sponsored retirement | | | | idea to begin taking withdrawals during your sixties. |
| plan. The reasoning behind the RMD rule is quite simply | | | | Roth IRA's, unlike traditional IRA's don't require that you |
| that the longer you are expected to live, the more Tax | | | | take RMD's by age 701/2 and in actual fact you never |
| relief you receive and the less the IRS needs you to | | | | need to. Qualified withdrawals from a Roth IRA are |
| withdraw funds and pay taxes each year. RMD's are | | | | tax free and in this instance you might be well advised |
| based upon a table which considers the participant's | | | | to sell investments in a Roth account when all other |
| and beneficiaries' lifetime, based upon their age. | | | | sources of funds have been exhausted. Be aware |
| Failing to take the RMD will result in some quite serious | | | | that after your death, you beneficiaries will be required |
| penalties; these penalties could amount to as much as | | | | to take Required Minimum Distributions. It is however |
| 50% of the RMD amount. This does not offer any | | | | good financial advice to seek professional assistance |
| Tax relief and it is therefore far wiser to take this | | | | from someone with tax experience before deciding to |
| option. It is interesting to note that if you are due to be | | | | do anything such as liquidating your Roth IRA. |