At What Age Must You Take Distributions From an IRA?

An individual retirement arrangement provides a tax-advantaged way to save for your retirement. Uncle Sam wants to be sure the tax advantages stay fair, so he won’t let you keep money in an IRA indefinitely. That’s why the IRA rules impose mandatory minimum distribution requirements on owners and/or their heirs. If you fail to make required withdrawals, the Internal Revenue Service imposes a 50 percent penalty tax on the amount you should have withdrawn.

Tax Deferred IRA

You must stop contributing to a tax-deferred personal IRA, SEP-IRA or SIMPLE-IRA and start withdrawing money from the account when you reach 70 1/2 years old. You must take the first mandatory distribution from the IRA by April 1 of the year following the year you reached 70-1/2 years. Then you must take a mandatory minimum amount each year for the rest of your life or until the IRA is exhausted. These distributions are subject to income taxes. You calculate your required annual minimum distribution each year by dividing your IRA account balance at the end of the year by your remaining years of life expectancy according to IRS longevity tables.

Inherited IRA

When the owner of a tax-deferred IRA dies, beneficiaries who inherit the IRA must take taxable mandatory minimum distributions regardless of age. Beneficiaries inheriting a tax-deferred IRA after the decedent began required minimum distributions at 70-1/2 years must continue taking distributions, with the minimum based on their life expectancies. If the IRA owner died before reaching 70-1/2 years, beneficiaries inheriting the account must start taking mandatory minimum distributions in the year the decedent would have reached 70-1/2 years, but based on their life expectancies. Surviving spouse beneficiaries have the additional option of transferring the assets into their own IRAs and halting minimum distributions until they reach 70-1/2 years.

Roth Rules

Roth IRA account owners don’t have any mandatory age to begin minimum annual distributions during their lifetimes. Owners' deaths trigger an IRS requirement that beneficiaries inheriting Roth accounts must take distributions from the account within 5 years of the owner’s death. In effect, the Roth owner’s age at death sets a required age for mandatory distributions to beneficiaries from the Roth account. Mandatory distributions to the beneficiaries are tax-free for Roth accounts opened more than 5 years before the owner died.

Roth Beneficiary Options

Roth beneficiaries' options include taking annual distributions from the account spread over their life expectancies, starting the year after the owner’s death. Or, beneficiaries can elect to take the entire proceeds of the Roth account in a lump sum no later than 5 years after the owner's death. Spouse beneficiaries have the additional option of rolling all the funds over into their own Roth IRAs, but must act within 5 years after the owner’s death.