When do I have to start taking money out?

Retirement accounts reward you for leaving the money alone. They do not let you leave it alone forever. At some point the law requires you to start taking it out, and the withdrawal has a name: a required minimum distribution.

The reason is tax. Most of this money went in before any tax was paid on it. The required withdrawal is when the tax finally gets paid, and the government is not willing to wait indefinitely for it.

There is a starting age, and it has moved more than once in recent years. Because it keeps moving, the age is not printed here. The IRS publishes the current one on irs.gov, and the company holding your account will tell you as well.

The amount is not a guess and it is not up to you. It is figured from the account's balance at the end of the prior year and a life expectancy table the IRS publishes. One is divided by the other, and that is the year's minimum.

Minimum is the operative word. You can always take out more than the minimum. You cannot take out less.

Missing one is expensive. There is a penalty on the amount that should have come out and did not. The penalty was reduced in recent years, and reduced further when the miss is corrected quickly, but it is still a penalty and it is still entirely avoidable.

A Roth is treated differently. Money in a Roth IRA is not subject to these withdrawals during the owner's lifetime, because the tax on that money was already paid on the way in. There is nothing left for the government to wait for.

Still working past the starting age can change the picture for a plan at work, and there is an exception that can apply there. It does not apply to an IRA. Whether it applies to you is a question for a tax professional.

Most companies holding these accounts will calculate the amount for you, and many will move it out automatically once you ask them to. Asking once can prevent exactly the kind of quiet miss that costs a penalty.

The withdrawal is taxed as income in the year it comes out, and that can move other things around on a tax return. A tax professional can look at that with you before the year ends, while there is still room to do something about it.

This article is general education, not financial, tax, or legal advice. Your situation is your own. For choices about specific products or accounts, talk with a licensed professional who can look at your full picture.