IRA Withdrawl Rules

Individual retirement account (IRA) holders must be aware of three time frames regarding the withdrawal of funds. With a few exceptions, there is a 10% penalty for withdrawing monies from an IRA before age 59½. Between the ages of 59½ and 70½, withdrawals can be done without penalty. After age 70½, funds must be taken out based on the IRA holder's life expectancy. In all cases, withdrawals are taxable.

Significance

Advance planning regarding the amount and date of a withdraw from an IRA account can save taxes, reduce or eliminate penalties and allow monies to grow for more years.

Types

There are differences in withdrawal rules between traditional IRAs and Roth IRAs. The most significant difference is that deposits, but not the interest, in a Roth IRA can be withdrawn before age 59½ without penalty.

Early Retirement

Early retirees can access IRA monies before age 59½ without penalty by withdrawing funds in equal payments for a minimum of 5 years and until age 59½.

Considerations

IRA withdrawals should be make in conjunction with overall retirement planning to reduce taxes and to make monies last longer.

Warning

Those considering withdrawing IRA money at any age should consult with a certified public accountant.

Resources

• CPA Directory