In a tax environment where change is a constant, knowing that some rules remain the same can be a relief. For example, the tax rule that lets you make charitable contributions from your individual retirement account is permanent, so you can rely on it as you update your 2016 tax plan.
Here are other IRA rules that haven't changed.
- Required withdrawals. When you reach age 70½, you're required to withdraw a percentage of your traditional IRA assets each year. You calculate the withdrawal using life expectancy factors from IRS-issued tables. Generally, the withdrawal amount is based on your age and the balance in your IRAs as of the previous December 31.
- Multiple accounts. You can have more than one traditional IRA account. Why would you want to? One reason: If you have several beneficiaries, you may want to establish separate accounts for each.
- Taxability. Withdrawals from traditional IRAs are taxable at ordinary income tax rates, whether you take your required distributions monthly, quarterly, or annually. In some cases, such as if you made nondeductible contributions, the total withdrawal may not be taxable. You can choose to have federal and state income tax withheld from your required IRA distributions, or you can make estimated tax payments throughout the year.
Give us a call or schedule a consultation if you have questions about the tax rules that apply to IRAs. We're happy to help you make the right choices.
