Pay attention to the required distribution rules for traditional IRAs. Folks 70½ and over must take withdrawals by year end or pay a penalty equal to 50% of the shortfall. You start with your IRA balances as of Dec. 31, 2012, and divide each one by the factor for your age, which you can find in IRS Pub. 590.
It also has a higher factor to use if you’re more than 10 years older than your spouse. The sum of these required withdrawal amounts can be taken from any IRA you pick. (Similar rules apply to retirement plan payouts, except that people owning 5% of less of the company who work past 70½ can delay payouts until they retire. Also, the minimum required distribution bust be taken from each retirement plan)
If you turned 70½ this year, you can delay distribution for 2013 to April 1, 2014. But this option doesn’t apply for payouts in subsequent tax years and the withdrawal for 2013 must still be based on the total of your IRA balances as of Dec 21, 2012.
And be careful if you decide to defer the distribution to 2014. Doing so means that you will be taxed in 2014 on two payouts: The one for 2013 that you deferred and the required withdrawal for 2014. The doubling-up of payouts could push you into a higher tax bracket and also trigger and 3.8% Medicare surtax.