How Much Money Can I Withdraw From My IRA Monthly?

One you reach retirement age, you won't face a penalty if you want to withdraw money from your IRA.

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Individual retirement accounts offer significant tax benefits to help boost retirement savings. While you may be tempted to withdraw money from your account before you retire, treating your IRA like a piggy bank can wreak havoc on your savings goals. Once you reach retirement age, how much you withdraw each month depends on your own personal preferences, total savings and overall financial plans.

Early Withdrawals

The Internal Revenue Service considers any withdrawal from an IRA made before the account holder reaches age 59 1/2 as an early withdrawal. Technically, you can withdraw as much money as you want from your IRA each month, but if you do so prior to retirement, you face stiff penalties from the IRS. Not only do you have to pay a 10 percent penalty for these funds, but you also have to pay taxes on this money. If you have a Roth IRA, you can withdraw your contributions at any time without paying taxes or a penalty. If you try to withdraw your earnings on these contributions, you are it with a 10 percent penalty. Withdrawing money from your IRA before retirement takes away some of the benefits of compound interest over time and can leave you drastically unprepared for retirement.

After Retirement

Once you reach the age of 59 1/2 you can take as much money out of your IRA or Roth IRA as you want without paying any penalty. You must pay taxes on funds withdrawn from a traditional IRA, because these accounts are funded with pre-tax dollars. Roth IRA withdrawals are tax-free because the contributions to these accounts are made using after-tax dollars.


Just because you can theoretically liquidate your IRA once you reach retirement age doesn't mean you should. One traditional guideline suggests taking out no more than 4 percent of the total value of your account in the first year of retirement, then increasing your withdrawal amount slightly each year thereafter to account for inflation. Online calculators can help you decide how much to withdraw each money based on your life expectancy, total savings balance and financial goals.

Required Minimum Distribution

Once you reach the age of 70 1/2, the IRS requires you to take minimum required distributions from your IRA each year. To calculate your RMD, divide your IRA balance on December 31st of the prior year by the IRS life expectancy factor that corresponds to your age. The IRS publishes life expectancy factor information in Publication 590. If you fail to withdraw at least the RMD, the IRS taxes the amount of the RMD you failed to withdraw at a hefty 50 percent. There is no penalty for withdrawing more than the RMD.