The Internal Revenue Service has strict rules on how much money you can put into an individual retirement account, whether it's a traditional or a Roth IRA. It also has rules on when you can start taking money out without any tax penalty and when you must start withdrawing money from traditional IRAs. There are no IRS limits, however, on how much you can withdraw once you're eligible to take money out.
Age 59 1/2 is the basic limit for withdrawing money from either traditional or Roth IRAs. Once you've passed that age -- and, if it's a Roth, the account has been in place for five years -- you can take out any amount you want, either in a lump sum or in regular distributions. Withdrawals from traditional IRAs will be subject to income tax at your regular rate. Roth money is taxed when it is put in so withdrawals are not taxable.
You must start withdrawing money from a traditional IRA at age 70 1/2. The IRS calculates a required minimum withdrawal amount, based on how much money is in the IRA and the taxpayer's life expectancy. That minimum can be withdrawn annually or on a regular basis during the year, so long as the minimum is met. A taxpayer can elect to take more than the minimum, but all traditional IRA payments are taxable.
There is no minimum or maximum withdrawal requirement for a Roth IRA. The only real distribution limitation on a Roth is that the account has to have been in place for at least five years. You can withdraw the money you contributed to a Roth at any time. For example, if you contributed $80,000 to a Roth and it's now worth $100,000, you can withdraw $80,000 without tax or penalty at any time. If you withdraw the earnings from a Roth IRA before age 59 1/2 and from a fund younger than five years, these earnings will be subject to your ordinary income tax rate, as well as a 10 percent penalty.
You can withdraw all your money from either a traditional or a Roth IRA without penalty if you roll the funds over into an annuity, which may make regular payments. You can determine the frequency and amount of payments when you buy the annuity.
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