IRA Distribution Rules

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IRA distribution rules state that once an account holder reaches the age of 70, they must withdraw a certain amount of money from the IRA account each year. Find out the distribution amounts based on age at the IRS Web site with help from a certified public accountant and personal financial planner in this free video on retirement savings.

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Video Transcript

Hi I'm Miranda Chook, a CPA. Tax rules require that IRA or IRA holders that reach age 70 and a half must withdraw a certain minimum amount every year. This amount is referred to as RMD or Required Minimum Distribution. And account holders who've reached age 70 and a half have until April 1st of the year following them turning that age to calculate the amount of the distribution. You take the value of your IRA account at the most recent December 31st and divide it by the distribution period. For example, if the value of your IRA account is 100,000 as of the most recent December 31st, and you go to the IRA distribution period table that's published by the IRS and it says for your age the distribution period is 20 years, you would take your 100,000 divide it by the 20 years and come up with 5,000 dollars. So that's the minimum amount that you must withdraw from your IRA account this year. The distribution period is printed in a table that is defined by the IRS and that does change from year to year. So for more information contact the IRS or the financial institution where you hold your IRA account.

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