I recently saw an article about how ERISA (Employee Retirement Income Security Act) is turning 40 this year. That piqued my curiosity, and I came up with the following list of birthdays for 2014.
- Telephone Numbers: 184 years old - telephone numbers were first used in 1880
- Income Tax 101 years old - income tax has been around since 1913
- Social Security is 79 years old - Social Security started in 1935
- Zip Code is 51 years old - 1963 is when the Post Office introduced zip codes
- IRA is 40 years old - IRAs became available in 1974
- 401(k) is 32 years old - the first 401(k) plans were established in 1982
The year a client turns 70 ½, not the actual day, is the year they have their first required distribution (RMD). The first RMD can be deferred until April 1 of the following year, but the RMD for that year must be taken by the end of the year. This results in two RMDs coming out in the same year. Any RMD amount not timely taken is subject to a penalty of 50% of the amount not taken.
So if you need something in your office or at home to celebrate during the year, you can use one of the events in the list above. Just be sure IRA account owners do not miss the 70 ½ milestone, that is the only one that comes with penalties.
Editor's Note: The Slott Report Mailbag will be posted tomorrow at www.theslottreport.com.
- By Beverly DeVeny and Jared Trexler
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