Q:

# What are the 2010 minimum distribution rules for IRAs?

A:

The Internal Revenue Service requires individuals with IRAs to take minimum distributions after reaching 70.5 or the year they retire, if later. Minimum distribution amounts change each year. The IRS bases the amount on a retiree's age, the account's distribution period and how much the IRA is worth.

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Though the IRS suspended mandatory minimum IRS distributions in 2009, it required retirees to take a minimum distribution in 2010. Most retirement account holders use the Uniform Lifetime Table life-expectancy chart to figure out mandatory distributions. This chart shows distribution periods for retirees ages 70 to 115 and older. The distribution period is how many years the IRS projects the retiree has to withdraw from his IRA. The older a person, the shorter the distribution period is and the more a minimum distribution is.

To calculate the minimum distribution amount, he needs to divide the value of the IRA by the distribution period. For example, the IRS projects that a 72-year-old has a 25.6-year distribution period. If his IRA is worth \$200,000, then his mandatory distribution is \$7,812.50, or \$200,000 divided by 25.6. An 86-year-old with an IRA worth \$200,000 must take a mandatory distribution of \$14,184.40, which is based on his 14.1-year distribution period. Beneficiaries of retirement funds and account holders with much younger spouses use different distribution tables.

The IRS requires that distributions occur during each tax year, which means an account holder has until April 15 to take a withdrawal for the preceding calendar year. The IRS lets account holders take two distributions in one calendar year, as long as one distribution is for the preceding tax year. For example, an account holder who chose not to take a distribution during calendar year 2010 can take two distributions in calendar year 2011, one for tax year 2010 and one for tax year 2011.

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