When Are You Required to Start Making IRA Withdrawals?


Quick Answer

Holders of traditional IRA accounts must begin required minimum distributions by the age of 70 1/2, reports CNN Money. The exception is a Roth IRA, in which money can remain as long as the account holder is alive.

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Full Answer

Account holders must begin making yearly required minimum distribution withdrawals by April 1 of the year following the year they become 70 and six months, according to the IRS. After the first withdrawal, account holders must withdraw at least minimum distributions every year by December 31, including in the year when the first amount is withdrawn. Larger amounts than the minimum may be taken. The distributions are subject to regular income tax. Account holders who do not withdraw at least the required minimum distribution pay a 50 percent excise tax penalty on the amount they should have withdrawn.

The IRS calculates the required minimum distribution by dividing the total assets in a holder's IRA accounts by life expectancy as determined by the IRS uniform life expectancy table, reports About.com. One way to avoid paying the penalty tax is to schedule automatic yearly withdrawals for IRA holders over 70 1/2, says Forbes. Charitable gifts given directly from IRA accounts count towards the required minimum distribution but do not count as taxable income up to a certain amount.

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