LONGMEADOW, Mass. (Mass Appeal) - Birthdays may seem less important as you grow older, but beginning at age 59, there are several key birthdays that can affect your tax situation, health-care eligibility, and retirement benefits.
Dylan Bond, Owner of Bond Financial Services, Registered Investment Adviser Representative and Licensed Insurance Professional, breaks it down.
59½ Free Withdrawals - You can start taking penalty-free withdrawals from IRAs and qualified retirement plans, provided certain conditions are met. Ordinary income taxes generally apply to these distributions. (Withdrawals taken prior to age 59½ are subject to a 10% federal income tax penalty.)
62 Social Security - You are eligible to start collecting Social Security benefits, although your benefit will be reduced by up to 30%. To receive full benefits, you must wait until "full retirement age," which ranges from 65 to 67, depending on the year you were born.
65 Medicare - You are eligible to enroll in Medicare. Medicare Part A Hospital Insurance benefits are automatic for those eligible for Social Security. Part B Medical Insurance -ben-efits are voluntary and have a monthly premium. To obtain -coverage at the -earliest possible date, you should generally enroll about two to three months before turning 65.1
70½ Retirement Plan Change - You must start taking minimum distributions from most tax-deferred retirement plans or face a 50% penalty on the amount that should have been withdrawn. Annual required minimum distributions are calculated according to life expectancies determined by the federal government.