Taking IRA Distributions
The IRS requires that you begin to take money from a regular
IRA by April 1 of the year after you reach age 70-1/2. These mandatory
withdrawals are called distributions.
The date on which you must take your first distribution is called your required
beginning date. From this point on, the IRS requires you to take a minimum
distribution (RMDs) at least once a year. (RMDs are also called MRDs.)
Except for the first year of an RMD (when you have until the following April 1),
you must take yearly distributions by Dec. 31. This means you have two
distributions in the calendar year of your required beginning date. Roth IRAs do
not have RMDs.
Amounts for required minimum distributions are based on your IRA account balance
and life expectancy. To calculate your RMD, divide your year-end IRA account
balance (adjusted for certain contributions and distributions) by the applicable
divisor in the appropriate table, found in the supplement to IRS Pub. 590.
For persons who are married with a spouse who is more than 10 years younger,
Table II: Joint Life and Last Survivor Expectancy is used to calculate the
period over which you divide your IRA balance. For example, the distribution
period that intersects your current age of 75 and your spouse's current age of
62 is 25.0. If your ending IRA balance is $238,000, your required distribution
is $9,520. Table II is also found in the supplement to IRS Pub. 590.
Now that you're taking distributions from a regular IRA, you will owe income
taxes in the year that you receive the distribution. If the entire amount of the
distribution is attributed to a tax-deductible contribution, you owe taxes on
both the contribution and earnings portion of the distribution.
If the distribution is attributed to a nondeductible contribution, you don't owe
taxes on the amount that is attributed to a nondeductible contribution. This is
because the nondeductible portion was an after-tax contribution to the account.
The above information is educational and should not be interpreted as financial
advice. For advice that is specific to your circumstances, you should consult a
financial or tax adviser.