Expert: Allen - 1/4/2005

Question
I am 69 1/2 & need to know how to figure my 401K rollover pension payout by 70 1/2. I have $85,000. What is the formula for how much I need to take out.

My wife has $125,000 & is 4 yrs younger so we intend to leave hers alone until she is 70 1/2.

Thanks much for advise.  

Answer
I'm assuming you will turn 70 1/2 before the end of 2005. If this is correct, you will have to begin to take minimum distributions on behalf of 2005 and later years. There is one complication. The 2005 distribution can be taken in either 2005 or the first three months of 2006. However if you wait until early 2006, you will then have to take two distributions during 2006 (the 2005 distribution in early 2006 and the 2006 distribution, anytime during 2006).
To determine the amount that must be withdrawn each year, you take the balance in the account at the end of the prior year and divide by a factor from a table published by the IRS. For example the 2005 distribution is the account balance on 12/31/04 divided by 27.4. The 2006 minimum is the 12/31/05 balance divided by 26.5. The factors for 2007, 2008 and 2009 are 25.6, 24.7 and 23.8 respectively. In any year you can always take out more than the minimum.