Your clients probably want to leave as much as possible to their heirs. However, if they don't take minimum distributions from their Individual Retirement Accounts after they reach 70-1/2, the government could take a substantial amount of those assets.The Internal Revenue Service can charge an excise tax of up to 50 percent if clients don't take the required minimum distribution from their IRA accounts or qualified retirement plans by April 1 of the year after the year they turn 70-1/2.
In other words, if the client turned 70-1/2 in 2006, they needed to have taken the required minimum distribution by April 1, 2007. Even if clients start taking distributions earlier, once they turn 70-1/2, they need to make sure that the distributions for that year and future years meet the IRS minimum requirements.
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