What Are the IRA Withdrawal Rules When You Reach 70 1/2 Years Old?

IRA owners must initiate yearly withdrawals, known as required minimum distributions, once they reach 70 1/2 years old, reports the Internal Revenue Service. Failure to withdraw required minimum distributions when they are due results in a penalty tax of 50 percent of the amount the IRA owner should have withdrawn.

Although the first required minimum distribution is due in the year the IRA owner turns 70 1/2, the IRA owner can delay the first withdrawal until April 1 of the following year, but he must make the second withdrawal by December 31 of the same year, advises the IRS. After that, he must make each yearly withdrawal by December 31. Account owners calculate the amount of the distribution by dividing the account balance as of December 31 of the previous year by the IRA owner’s life expectancy based on an IRS table. The IRA owner must recalculate the amount each year. The owner of the plan is responsible for calculating the correct distribution, although an IRA plan administrator may provide assistance.

The IRA owner can withdraw more than the amount of the required minimum distribution, but any excess amount withdrawn does not count toward the following year’s distribution, according to the IRS. If an IRA owner has several IRA accounts, he must calculate the required minimum distribution for each account separately, but he can withdraw the total amount due from any of the accounts.