How would you like to turn your modest tax-deferred account into millions for your family? Depending on whom you name as beneficiary, you can keep this money growing tax-deferred for not only your and your spouse’s lifetimes, but also for your children’s or grandchildren’s lifetimes. That can turn even a modest inheritance into millions.
1) Don’t I have to use this money for my retirement?
When you reach a certain age, usually 70 1/2, Uncle Sam says you must start taking your money out. (This is called your required beginning date.) But if you don’t use all this money before you die, naming the right beneficiary can keep it growing tax-deferred for decades.
2) How much will I have to take out?
Calculating the amount you must withdraw each year (your required minimum distribution) is much easier now than it used to be. Each year, you divide the year-end value of your account by a life expectancy divisor from the Uniform Lifetime Table (provided by the IRS). The result is the minimum you must withdraw for that year. You can always take out more.