After receiving a required distribution when and how are my taxes affected?

By Denise Appleby AAA
A:



Any taxable amount of the distribution will represent ordinary income for the year that the distribution occurs and will be subject to income tax at your regular/ordinary income tax rate.

If the amount is significant, it could put your income in a higher tax bracket.

Visit the IRS website for 2007 Federal Tax Rate Schedules.

For more on required minimum distributions (RMDs), see Avoiding RMD Pitfalls and Strategic Ways To Distribute Your RMD.

This question was answered by Denise Appleby
(Contact Denise)



RELATED FAQS

  1. Does it make sense to convert a Traditional IRA to a Roth when the market’s down?

    If your modified adjusted gross income (MAGI) is $100,000 or less and you are not married filing separately, you may initiate ...
  2. Can I roll a Traditional IRA into a 529 college account for my grandchild?

    A 529 plan, also known as a "qualified tuition program", is an investment vehicle that allows individuals to save for education ...
  3. Can I still set up an SEP if one of my employees refuses to participate?

    You can establish the SEP IRA, even if the employee refuses to participant. However, you would need to establish an IRA for ...
  4. I want to close my IRA account. What percentage will I lose to tax?

    You can move the amount by means of a trustee-to-trustee transfer to another IRA, or roll over the amount to your 401(k). ...
RELATED TERMS
  1. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  2. Leveraged Benefits

    The use – by a business owner or professional practitioner – ...
  3. Peri-Retirement

    A term for the period of time leading up to actual retirement. ...
  4. MyRA

    A new tax-advantaged retirement account that President Barack ...
  5. Provident Fund

    A compulsory, government-managed retirement savings scheme used ...
  6. Rollover IRA

    A special type of traditional individual retirement account into ...
comments powered by Disqus
Related Articles
  1. Impact Of Continuing To Work In Retirement ...
    Retirement

    Impact Of Continuing To Work In Retirement ...

  2. Independent 401(K): A Top Retirement ...
    Retirement

    Independent 401(K): A Top Retirement ...

  3. After-Tax Balance Rules For Retirement ...
    Taxes

    After-Tax Balance Rules For Retirement ...

  4. Should You Convert Your IRA?
    Retirement

    Should You Convert Your IRA?

  5. Changes In Tax Legislation And Regulation
    Taxes

    Changes In Tax Legislation And Regulation

Trading Center