|With roughly 77 million baby boomers entering retirement, much old, standard advice is being challenged by growing human longevity and retirees' risk of outliving their money.|
There are some ground rules courtesy of the IRS to abide by carefully. Failing to follow the letter of the law can cost you big time. Just how much you will need to withdraw -- the Minimum Required Distribution -- is a confusing calculation based on an actuarial assumption of lifespan. The IRS has worksheets, and there are a variety of online calculators to help determine the amount. Your plan sponsor and administrator, as well as your financial adviser if you have one, can crunch the numbers as well. If you have a 401(k) plan or IRA, the IRS requires that retirees take the first distribution by April 1 of the year after reaching age 70.5. In subsequent years, annual distributions are required by Dec. 31. Failing to do so will mean having to surrender a 50% excise tax on the amount you were supposed to have withdrawn.