Ask Terry Questions taking money from an IRA

taking money from an IRA

By Terry Savage on February 24, 2024 | Financial Planning / Retirement

I work with a gentleman that is 89 years of age and he said he was told by his tax guy that he needs take money out of his IRA before the end of the year so he is not charged. That the government does not want to wait till than of the year. He was told that he should take money out through out the year and have the taxes taken. He stated he spoke to someone at his bank and they told him not to change anything. Just wondering about this . I will let him know what you say.
Thank you

Terry Says

Well, has he been taking the Required Minimum Distribution out of his IRA every year over these past nearly 20 years? He should have been taking those RMDs since he was age 70-1/2 as that was the starting point when he was that age.

If it’s a question of WHEN he takes the distribution, it can be done at any time throughout the year. BUT depending on his income level and the amount of the distribution, he would have to pay quarterly estimated taxes throughout the year. Maybe his overall income is so low that this is not required.

Otherwise, he should figure out now — based on the total value of his IRAs at the end of last December –the amount he will be required to withdraw in 2024. Then I would suggest he take a quarter of that amount by the end of March, another quarter by the end of June, another quarter by the end of September, and the final quarter of the amount on December 1st.

AND YES, the custodian of the account should withhold taxes on each distribution. They will ask about his other income and calculate the percentage that should be withheld from each distribution for taxes.

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