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pension distributions

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TrustUser

Senior Member
What is the name of your state (only U.S. law)? california

i manage my own pension plan

i qualified to take a certain amount out before i turned 59 1/2, which i have been doing

at the time, the rules were once the amount was established, you had to take the same amount each year until 59 1/2. from then until 70 1/2, you could basically take whatever amount you wanted. and then at 70 1/2, you had to take a specified amount, based upon your age and the amount in your account.

i am turning 60 at the end of this year. and i wanted to do some reading to make sure i do things as i should.

anyone point me to a good article for me to refresh myself on the rules that i should be adhering to ?
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? california

i manage my own pension plan

i qualified to take a certain amount out before i turned 59 1/2, which i have been doing

at the time, the rules were once the amount was established, you had to take the same amount each year until 59 1/2. from then until 70 1/2, you could basically take whatever amount you wanted. and then at 70 1/2, you had to take a specified amount, based upon your age and the amount in your account.

i am turning 60 at the end of this year. and i wanted to do some reading to make sure i do things as i should.

anyone point me to a good article for me to refresh myself on the rules that i should be adhering to ?
You basically have it right, except for after age 70 1/2 you have to take out your required minimum distribution OR you can take more if you like. Basically you can take as much as you want as long as you at least take your required minimum distribution.
 

TrustUser

Senior Member
thanks.

so for about the next 10 years, i can choose to take any amount, or nothing at all ?

are there any thoughts or guidelines as to it being better to continue to allow the funds to build up some, without being taxed ?

or perhaps better to take more now, and spread the graduated tax thru a greater number of years ?

i sorta needed the funds awhile back, which is the reason i started taking some.

but at this point, i no longer need the funds for current use.

so i guess the main goal would be to use the system that would give me the most dollars at the end ?
 

TrustUser

Senior Member
regarding distributions -

lets say that i am now 70, and have decided to start my minimum distributions

i look at my account balance last dec 31.

i then see that my current life expectancy is 17.0

so i take that account balance, divide by 17.0, and take that amount ?

next year comes along, and i use the amount of the following dec 31 balance.

divide that by 16.3, my current life expectancy at 71 ?

and just follow that same process until there is not enough left in the account to bother with it any more.

is that basically correct, in a nutshell ?
 

LdiJ

Senior Member
regarding distributions -

lets say that i am now 70, and have decided to start my minimum distributions

i look at my account balance last dec 31.

i then see that my current life expectancy is 17.0

so i take that account balance, divide by 17.0, and take that amount ?

next year comes along, and i use the amount of the following dec 31 balance.

divide that by 16.3, my current life expectancy at 71 ?

and just follow that same process until there is not enough left in the account to bother with it any more.

is that basically correct, in a nutshell ?
Try this website:

https://www.fidelity.com/retirement-planning/learn-about-iras/minimum-required-distributions/retirement-distribution-center?imm_pid=1&immid=00854&imm_eid=e41616137&buf=999999

Or in the alternative, google "how to calculate required minimum distributions".

As far as the next 10 years is concerned, conventional wisdom is that you don't take out any money unless you actually need it.
 

TrustUser

Senior Member
my full retirement age is 66, but i plan to wait until 70, and get a larger amount.

probably also about that time, i will start getting distributions from my mom's trust (she is 89, and unfortunately i dont think she has 10 more years left in her).

between us 4 kids, i may get about 6-8,000 a year, plus social security, whatever that may be - that i wont be getting before.

with that in mind, do you think that conventional wisdom still dictates not taking any of my own pension until 70 ?
 

LdiJ

Senior Member
my full retirement age is 66, but i plan to wait until 70, and get a larger amount.

probably also about that time, i will start getting distributions from my mom's trust (she is 89, and unfortunately i dont think she has 10 more years left in her).

between us 4 kids, i may get about 6-8,000 a year, plus social security, whatever that may be - that i wont be getting before.

with that in mind, do you think that conventional wisdom still dictates not taking any of my own pension until 70 ?
If you do not need it, yes. Do however, take out what you need.
 

TrustUser

Senior Member
okay, thanks.

i guess that is what i will do.

i dont expect to need it, but if i do, i will take what i need.

and then leave the rest in there until mrds take over.
 

TrustUser

Senior Member
hi ant,

no, this is an actual pension plan (i was self-employed most of my working years)

had it drawn up by a pension firm, and then okayed by the irs, with my own tax id number for it

i file a pension return every year - 5500ez for my plan. about as simple as you can get

if i recall, i could place 15% of my income in it when i worked. whatever it was, i always put in the maximum.

everything in it is fully taxable.

there are 2 opposing forces here.

one is to delay taxes, for further growth.

the other is to even out your income, because of the graduated tax tables.

if i wasnt gonna have sources of income in the future that i dont have now, it would not be an issue.

one thing about the pension is that if push comes to shove, those funds are more highly protected than what is in my personal accounts.

so i guess unless someone can definitively show me where i will make out better by taking it now, i will delay taking it, until i need or forced.

according to my 2010 ss statement, if i wait until 70, i get 1781 a month, roughly 21,000 annually.

if i include another 6, i will be making 27,000 more a year than i do now. being that i no longer work, that is a considerable increase in my total earnings.
 

curb1

Senior Member
Are you referring to a 72(t) distribution? In my case I rolled pension into an IRA and then did a 72(t) distribution at age 55. In that case I was required to take the same distribution for 5 years. At the end of five years I could change the distribution to whatever amount I wanted, or none at all.
 

TrustUser

Senior Member
i dont recall any law numbers.

but i am past that stage in a couple months.

i am not forced to take anything next year, and can take as much as i want - for about 10 years, until required minimum distributions are required.

it looks like i am gonna have a real estate loss that i can take only 3,000 loss each year.

so i am thinking it is gonna be smart to at least take something, while my income is much lower than it will be 10 years or so, from now.

i think i will just look at my tax return each year, and take out an amount that looks good to me, from a taxation standpoint.

it is not a live or die issue - just trying to take the best route possible.
 

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