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Retirement Savings after 70
Matt:
The rules are generally as follows, but there are exceptions (and the retirement plan can require earlier distributions):
The distribution rules do not put a cap on distributions, only a floor. She must start taking minimum distributions beginning in the calendar year she turns 70 . However, she may defer the distribution for that year until April 1 of the following year. In each year after the first she must take her distribution by Dec. 31 of that year. There are substantial tax penalties for taking less than the minimum distribution. The distributions are determined by IRS life expectancy tables. The life expectancy for the year in question is divided into the account balance for the previous year to determine the minimum distribution.
Distributions maybe taken after age 59 without a penalty. So between 59 and 70 there are no penalties for withdrawals, just income tax (unless the contributions were after tax)
Of course the asset is most likely not part of the BK estate and exempt if it was, so for BK purposes the above doesnt seem to matter.
If you have any questions or concerns, please contact someone who actually knows what they are talking about.
Pat
Patrick T. Green, Esq.
Fitzgerald & Green
Attorneys at Law
1010 E. Union Street
Suite 206
Pasadena, CA 91106
Tel: 626-449-8433
Fax: 626-449-0565
pat@fitzgreenlaw.com
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What kind of retiremement account is it? IRA? 401-k? 403(b)? Is
it Erisa qualified? If so then not an asset of the estate at all and
not an issue. if an IRA exempt under 522(b)(3)(c). If she just calls
it a retirement account it's a problem. If people are over 59 1/2
they can withdraw from any retirement account without penalty, its
just potentially taxable income depending on the type of account.
Mark T. Jessee
Law Offices of Mark T. Jessee
"A Debt Relief Agency"
50 W. Hillcrest Drive, Suite 200
Thousand Oaks, CA 91360
(805) 497-5868
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On Fri 1/05/09 2:49 PM , Matt Resnik matt@simonresniklaw.com sent:
Client came in this afternoon with $300,000 in a Retirement Account.
She can "technically" take a distribution without penalty.
This sounds like trouble for a Chapter 7....Am I correct ....? and
why???
--
Matthew D. Resnik
Attorney at Law
Simon and Resnik LLP
449 S. Beverly Drive
Suite 210
Beverly Hills, Ca
90212
T:310-788-9777
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Is it an ERISA qualified retirement account?
Does the retirement account contain an antialienation provision that constitutes a restriction on transfer enforceable under applicable nonbankruptcy law for purposes of 11 USC 541(c)(2)?
See Patterson v. Shumate, 504 U.S. 573 (1992) at http://docs.justia.com/cases/supreme/504/753.pdf
Hope this helps,
Donny Brand
Brand & Spellman PC
3836 E. Anaheim St.
Long Beach, CA 90804
562-438-7500
888-99-BKRPT (888-992-5778)
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She has a minimum distribution to take which is income, and that should be calculated, although I think that requirement is suspended for this year to allow for the meltdown. Otherwise, it is exempt as needed for her maintenance and support. If she is just 70 then she is probably OK, but youesnt realize $300K for a 70 year old is not that much.
The post was migrated from Yahoo.
Client came in this afternoon with $300,000 in a Retirement Account. She can "technically" take a distribution without penalty.
This sounds like trouble for a Chapter 7....Am I correct ....? and why???
Matthew D. Resnik
Attorney at Law
Simon and Resnik LLP
449 S. Beverly Drive
Suite 210
Beverly Hills, Ca
90212
T:310-788-9777
F: 310-788-0017
Matt@resniklaw.com
www.simonresnik.com
The post was migrated from Yahoo.