(MONEY Magazine) -- Question: I turn 70½ in February and must begin taking required minimum distributions from my 401(k). Do I have to take a second RMD when I turn 71 later this year? If so, how can I minimize taxes? -- Allen Metz, Sun Lakes, Ariz.
Answer: Actually you don't have to take any distributions from your 401(k) this year; IRS rules allow you to delay your first RMD until April 1 of the year after you turn 70½.
If you choose to delay, you will have to schedule two withdrawals next year: one to make up for 2011's payment and one for 2012.
Tax-wise, if getting two payments in a single year would push you into a higher bracket, you're probably better off spreading them out, says Abe Schneier, senior technical manager at the American Institute of Certified Public Accountants.
But deferring could make sense if you want to give your investments more time to grow or expect your tax rate to be lower in 2012 (say, if you plan to retire this year).
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.78%||3.78%|
|15 yr fixed||2.99%||2.98%|
|30 yr refi||3.76%||3.79%|
|15 yr refi||3.00%||2.98%|
Today's featured rates:
Nike is opening up shop on Amazon.com and the company plans "big shifts" over the coming year. More
JPMorgan Chase is hoping to ease Washington D.C.'s income inequality problem by investing $10 million in two of its poorer neighborhoods. More
Russia says it will ban Facebook in 2018 if the social network fails to comply with local data storage laws. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
When you're making big career decisions, you turn to your mentors and your trusted peers. But how do you find these mentors and trusted peers in the first place? More