What Are the IRA Distribution Rates for People 70 Years Old As of 2015?


Quick Answer

Required minimum distributions are required beginning in the year in which a taxpayer reaches age 70.5 and are calculated by dividing the balance of the individual retirement account by the remaining life expectancy. Internal Revenue Service tables give 17 years as the life expectancy of a 70-year-old in 2015.

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Full Answer

A traditional individual retirement account, or IRA, is a method of saving for retirement in which both the principal and interest are allowed to accumulate tax-free. Taxes are paid at the time of withdrawal. Under normal circumstances, a taxpayer may not begin withdrawals until reaching age 59.5. After reaching age 70.5, a taxpayer may withdraw more than the required minimum distribution during the year but may not withdraw less without incurring a 50 percent penalty on the difference between the amount withdrawn and the required minimum distribution. This rule applies even if the holder of the IRA continues working.

IRA funds withdrawn before a taxpayer reaches age 59.5 are subject to a 10 percent penalty in addition to the required tax. The IRS waives the penalty for funds withdrawn to meet unreimbursed medical expenses in excess of 7.5 percent of adjusted gross income, to pay for medical insurance under certain circumstances, to cover expenses related to disability, to pay qualified higher education expenses or to cover qualified acquisition costs of purchasing a first home. The funds may also be used to satisfy an IRS levy.

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