Are You 70 and Half Years Old?

Are You 70 and Half Years Old?

For those farmers or other tax payers who are 70 and 1/2 years old and have retirement or IRA accounts, be aware of having to take required minimum distributions once you turn 70 and a half. CliftonLarsonAllen Principle and Farm CPA Today blogger Paul Neiffer explains

Neiffer: "They are normally required to start taking out a minimum distribution in beginning in the year in which they turn age 70 and half — it's not 70 — it's 70 and half. So in that year, they are normally required to take out their minimum distribution which is calculated by taking the beginning balance at the beginning of the year and dividing it by a deviser which is around 17 or 18. They have an option. They can take either not take it that year or they can take it the following year before April 1st. However, if they elect to not take it in that current year and defer to the following year, they then have to take two distributions. They have to take the distribution that was required for the current year plus the distribution for the following year. Most of the time I recommend that they take the distribution in the current year because what will happen if they wait to the following year — a lot of times it kicks them up to a higher tax bracket. Let's say they go up to the 35 percent from the 25 percent — might make more of their social security taxable. Really bottom line, they really need to review it with their tax advisor to see which makes more sense."

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