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You must begin taking distributions from an IRA no later than April 1st of the year following the year in which you reach age 70-1/2, or the year in which you retire, whichever is later. For any year after your 70-1/2 year, you must take the minimum distribution by December 31st of that year. There's an exception to this rule for Roth IRAs, which carry no mandatory distribution requirements.
The amount of your mandatory distributions must be calculated under a formula prescribed by the IRS. If you take less than the required distribution, the penalty for taking too small a distribution is a 50 percent excise tax on the amount not withdrawn as required. You can always take more than the required amount (assuming you're over age 59-1/2) but the extra withdrawals don't count toward your minimums for future years.
Under rules that officially went into effect in 2003, one simple and uniform table allows most participants to determine the required minimum distributions. The table provides a uniform distribution for all participants who are the same age. The table assumes that each participant has a beneficiary who is exactly 10 years younger. Thus, a retiree determines the required annual distribution by:
- locating his or her current age on the table to obtain the distribution period, and
- dividing that number into the account balance as of the end of the previous year.
By using the uniform distribution period table, most participants will be able to determine their required minimum distribution for each year based on just their current age and the account balance as of the end of the prior year.
Uniform Distribution Period Table for
Determining Required Lifetime Minimum Distributions |
| Age of Individual |
Number of Payout/Distribution Years |
| 70 |
27.4 |
| 71 |
26.5 |
| 72 |
25.6 |
| 73 |
24.7 |
| 74 |
23.8 |
| 75 |
22.9 |
| 76 |
22.0 |
| 77 |
21.2 |
| 78 |
20.3 |
| 79 |
19.5 |
| 80 |
18.7 |
| 81 |
17.9 |
| 82 |
17.1 |
| 83 |
16.3 |
| 84 |
15.5 |
| 85 |
14.8 |
| 86 |
14.1 |
| 87 |
13.4 |
| 88 |
12.7 |
| 89 |
12.0 |
| 90 |
11.4 |
| 91 |
10.8 |
| 92 |
10.2 |
| 93 |
9.6 |
| 94 |
9.1 |
| 95 |
8.6 |
| 96 |
8.1 |
| 97 |
7.6 |
| 98 |
7.1 |
| 99 |
6.7 |
| 100 |
6.3 |
| 101 |
5.9 |
| 102 |
5.5 |
| 103 |
5.2 |
| 104 |
4.9 |
| 105 |
4.5 |
| 106 |
4.2 |
| 107 |
3.9 |
| 108 |
3.7 |
| 109 |
3.4 |
| 110 |
3.1 |
| 111 |
2.9 |
| 112 |
2.6 |
| 113 |
2.4 |
| 114 |
2.1 |
| 115 and older |
1.9 |
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Warning
Computing minimum IRA distributions using the old rules can be a rather daunting task, especially if you've established numerous IRAs over the years. Many financial institutions are willing to help you compute the minimums if you consolidate your accounts with them. Otherwise, you might consider hiring a financial planner or accountant to help you set up a withdrawal schedule, since the 50 percent penalty for making a mistake in this area is quite severe.
Special rules, too numerous to relate here, apply if your beneficiary is not your spouse and is more than 10 years younger than you, if you change beneficiaries, if your beneficiary dies or if you receive an inherited IRA account. For more detailed information, see IRS Publication 590, Individual Retirement Arrangements (IRAs).
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Since 2003, IRA trustees are required to provide account holders with a statement of their year-end account balances by January 31. In addition, the trustee is also required to state the amount of the required distribution and the date by which such amounts must be distributed. This is great news for IRA holders because it will relieve them of the burden of making mandatory distribution calculations and staying in compliance.
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