Just to clear things up a little bit, an IRA is actually called an Individual Retirement Arrangement, not an Individual Retirement Account, but everyone calls it an Individual Retirement Account so that’s why I call it that. I’m not usually a stickler for such things and I don’t really care what anyone calls it as long as we know what we’re talking about but in case it ever comes up on Jeopardy, you’ll know what it really stands for.
Now, what about withdrawing funds from your IRA? The two major age milestones for an account holder are 59½ and 70½. At 59½, you are eligible to begin withdrawing as little or as much from your IRA as you’d like with any sort of penalty. If you’re under 59½, there are a whole bunch of exceptions that will permit you to withdraw money from your IRA but you have to be very careful with documentation or the government will penalize you. At 70½, you must begin withdrawing from your regular IRAs because the government would like to start taxing it, thank you very much. How much you’re forced to withdraw is based on the IRS life expectancy tables and withdrawing the minimum practically guarantees that you probably won’t outlive your retirement assets, but you can always take out more. An exception to the 70½ forced withdrawal is the Roth IRA since the government has already taxed those dollars, you do not have to begin taking withdrawals from your Roth at any age.
4 responses to “Withdrawing Funds from an Individual Retirement Accounts”
Do distributions from a traditional IRA, qualify as contributions to a Roth IRA?
Do you mean do they qualify as income? If so, no, the income has to be earned and distributions from a traditional IRA isn’t considered earned income.
adding that Individual retirement account is a correct term, just that individual retirement arragement is an umbrella term
I was told that at 70 yo I must begin taking $ out of my annuity account but there is also a limit on withdrawals per year plus the tax.
Also, I have taken some money out at 68 and was told there was only 2500 more for the year that I can withdraw.
What can you tell me about either of these topics?