What Is the Schedule for Making Mandatory Minimum Withdrawals From an IRA at 70.5?


Quick Answer

Mandatory minimum withdrawals must initiate by April 1 of the year after an IRA holder reaches 70 1/2, and account holders must take distributions every subsequent year by December 31, reports the IRS. Some plans allow IRA holders continuing to work after 70 1/2 to initiate distributions when they retire.

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Full Answer

To avoid being taxed on two distributions in the same year, IRA account holders may take their first distribution by December 31 of the year they turn 70 1/2, but the distribution must be made by April 1 of the following year, according to the IRS. If the first distribution is delayed until the year after the account holder becomes 70 1/2, the second distribution must be made by December 31 of the same year. The penalty for not taking distributions by the deadline is a 50 percent tax on the amount that should have been distributed. Although the account holder can withdraw more than the required minimum distribution, the extra amount withdrawn does not count toward the next year's required distribution.

The annual required minimum distribution is calculated by dividing the amount in the IRA account the previous year by the estimated life expectancy of the retiree according to an IRS uniform lifetime table, as reported by Bankrate. The IRA account holder is responsible for calculating the correct distribution amount, states the IRS. To avoid penalties, IRA account holders over 70 1/2 should set up automatic withdrawals, advises Forbes.

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