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Age 69 1/2: The IRA Owner's Most Important Year?

Surprise: 69 1/2 is a major year in the 'life planning calendar.'

Natalie Choate, 04/10/2015

In 2015, we are looking at planning ideas for different life stages. This month: The year the IRA owner reaches age 69 1/2.

Wait a minute, who cares about turning age 69 1/2? Everybody knows the big year is when you reach age 70 1/2, not 69 1/2, right?

Wrong. Age 69 1/2 is a big deal, a major year in the "life planning calendar."

In the year you reach age 69 1/2:

> If you're still working, this is your final chance to make a traditional IRA regular contribution.

> And it's your final year to roll your traditional IRA into your workplace plan (if you are still working) to totally avoid taking any required minimum distributions from the IRA.

> Now's the time to consider other ways to reduce future RMDs too, such as Roth conversions and purchase of a QLAC.

Final Traditional IRA Contribution
If you are age 70 1/2 or older at the end of a calendar year, you are not allowed to contribute to a traditional IRA for that year. So the last year you can make a "regular" contribution to a traditional IRA is the year in which you turn 69 1/2.

Natalie Choate practices law in Boston with Nutter McClennen & Fish LLP, specializing in estate planning for retirement benefits. Her book, Life and Death Planning for Retirement Benefits, is a leading resource for professionals in this field.

The author is not an employee of Morningstar, Inc. The views expressed in this article are the author's. They do not necessarily reflect the views of Morningstar. The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

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