October begins the last quarter of the year. The leaves change colors and fall, the sky turns from blue to gray, the air gets colder, and you begin thinking about taking your required minimum distribution. Well, probably not that last one, but you should. If you turned 70 this year, you should probably consider taking a distribution from your traditional Individual Retirement Account (IRA). If you turned 70 ½ in 2013, you are required to take a distribution from your traditional IRA or face a stiff penalty from the IRS for failing to do so. Uncle Sam has graciously allowed you to grow your IRA tax free for many years now, and if you are over 70 ½ he wants his tax money now.

In order to comply with this requirement, you should contact any and all institutions where you have a traditional IRA or traditional 401(k) and ask what your required minimum distribution is. Add all those numbers together and develop a plan for taking the distribution. You need not necessarily take a distribution from each account; one distribution from a single account large enough to cover the total amount required from each account will suffice. You don’t even have to take the money in cash and spend it. You can transfer securities of appropriate value from your IRA or 401(k) to a taxable account (like a living trust account, an individual investment account, a joint securities account, or a pay on death or transfer on death account) to satisfy the distribution requirement. Depending on whether you typically receive a refund at the end of the year, you may want to elect to have money withheld from your distribution and sent to the federal government. (Retirement income is not yet taxable in Illinois. Don’t forget about that when you go to the polls in November.)

If you have any questions about Required Minimum Distributions and how they might affect your estate planning, please contact us with them. We can help you use these required distributions effectively as part of your estate planning strategy. But don’t wait too long to call us. You only have until December 31, 2014 to take your distribution, and if the displays already in the stores are to be believed, Christmas will be here before you know it.