Tapping Your Cash Is Trickier Than You Think
"Tapping your cash is trickier than you think," which ran in some editions (Personal Business, July 24), incorrectly described rules for nonspousal IRA distribution and excise taxes on retirement plans. Children who inherit an IRA can withdraw the money gradually over their lifetime only if the plan contributor died before age 70 1/2. Otherwise, nonspousal heirs must keep the original owner's payout schedule, and complete it within five years. When you die, the 15% excise tax on your retirement plan applies to amounts exceeding the present value of a $150,000-per-year annuity paid over the remainder of your IRS mandated life expectancy.