When to take your first distribution from an IRA

Q: I have two IRAs from two different sources. I will be 70-1/2 in late September, and the IRS says that I must start taking money out of the accounts. Do I have to take a percentage from each IRA, or just one? How much money must I take from one or both?
C.K., Chagrin Falls, Ohio

A: "You must have read an erroneous report," says Ed Slott, a certified public accountant in Rockville Centre, N.Y,. who publishes Ed Slott's IRA Advisor (www.irahelp.com). "You don't have to take the distribution now. But you must take your first IRA distribution by the first April 1 after the day that you turn 70-1/2. For you, that would be April 1, 2003."

Still, Mr. Slott says, it actually makes sense for you to take the initial distribution this year, to avoid any mistake that could force you to take a double distribution next year. You can take that distribution from either IRA. The formula you would use for your distribution: Divide 27.4 into the total amount held in the two IRAs added together as of Dec. 31, 2001.

Why 27.4? Because, says Slott, that is the IRS-calculated life expectancy of a 70-year-old adult as of March 2002, when you reached age 70.

Just to make sure that all the dates and information you gave us were correct, you might want to go over all of this with a retirement expert from one of your IRA providers, or with an accountant or lawyer.

Q: Where should a couple keep all of their major documents, in case of the death of either spouse? I am thinking of marriage licenses, insurance papers, birth certificates, house titles, etc. It is a terrible question to ask, but one required by practicality.
R.M., New York

A: The general rule: Keep your important records and documents in a fireproof home safe or a bank safe-deposit box to which both spouses have access. Check with your bank to see if state law requires that boxes be closed for inventory after a spouse's death. Usually the co-owner will have access. If not, then keep life- insurance policies and your wills in a home safe or file cabinet. Living wills can also be kept with your attorney, and copies can be given to a spouse or friend.

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