Question for the Money Doctors
Question submitted on Aug 6, 2021.
Questioni have less than seven k in a bank c.d. and are being told to start takeing out some money @72,i am 71 now ,how much can i take out,? how much will i have to pay in tax's ? i live off my ssi now.
It sounds like the money you have in the CD is owned in an IRA, and therefore is subject to the required minimum distribution (RMD) rules. That means you are required to start taking distributions at age 72. The required minimum amount is generally between 4-5% of the value at the end of the prior year, so for a $7,000 IRA, the amount would be less than $500. The actual amount of the RMD is calculated using IRS tables that are based on your life expectancy.
Keep in mind that you can take distributions from an IRA without penalty after age 59 1/2; the requirement to take a minimum amount kicks in at age 72.
Amounts you take from a traditional (non-Roth) IRA are generally subject to income tax at your ordinary tax rate. If you contributed to your IRA on an after-tax basis, your distribution may not all be taxable.
For additional information visit //www.360financialliteracy.org/