How to Calculate the Distribution Amount of Traditional IRAs When 70 1/2 Years of Age
When you turn 70 1/2, the Internal Revenue Services forces you to start taking minimum distribution amounts from your traditional individual retirement arrangement (IRA). Your withdraws can exceed the minimum amount, but failure to take the minimum distribution results in a 50-percent tax penalty. The first minimum distribution must be taken by April 1 of the following year, but the required distributions for future years must be completed by Dec. 31. The minimum amount of your distribution depends on your age and your traditional IRA value.
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Instructions
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Look up the Joint and Last Survivor Expectancy Table in the appendix of IRS Publication 590 if your spouse is your sole beneficiary and you are at least 10 years older than your spouse. If not, use the Uniform Life Table, also in the appendix of IRS Publication 590 (see References).
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Find your age as of the end of the year in the left-hand column of the table. If using the Joint and Last Survivor Expectancy Table, also find your spouse's age in the top row, and locate the cell at which the row and column meet to find your life expectancy. If using the Uniform Life Table, simply find your life expectancy next to your age. For example, if you are still 70 at the end of the year and use the Uniform Life Table, as of 2011, your life expectancy equals 27.4 years.
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Divide the value of your traditional IRA as of the close of the previous year by your life expectancy to calculate the minimum distribution amount of your traditional IRA when you are 70 1/2 years old. In this example, if your IRA had a value of $560,000 at the close of the previous year, divide $560,000 by 27.4 to find your minimum distribution equals $20,437.96.
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Tips & Warnings
The IRS still requires you to take a required minimum distribution from your traditional IRA even if you are still working full time at age 70 1/2.
