How to Remove My IRA Money for Retirement

Follow the right steps before grabbing cash from your IRA account.

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How you take money out of an individual retirement account or IRA after you retire depends in part on what type of account you have. A traditional IRA gives you a deduction from taxable income when you contribute money to the plan. A Roth IRA is funded with money on which you pay taxes. Traditional IRA withdrawals are subject to income taxes, while Roth IRA distributions are not.

Step 1

Withdraw money from either a traditional or a Roth IRA that has been in place for at least five years in a lump sum or in partial amounts once you reach age 59 1/2. When you withdraw from a five-year Roth at age 59 1/2, you don't have to pay taxes or penalties. Report traditional IRA withdrawals as taxable income on your federal tax return. Roth IRA withdrawals are tax-exempt because taxes were paid when the money was put in. The IRS says most distributions from Roth IRAs do not have to be reported on a tax return.

Step 2

Roll over a lump sum or total fund withdrawal from a traditional IRA into an annuity, which pays monthly or other regular benefits, and escape taxation on the lump sum distribution. Report those periodic payments as regular income for tax purposes. Show annual income of $1,200, for example, if your annuity pays $100 a month.

Step 3

Take partial withdrawals from a traditional IRA, just like annuity payments, if your plan provides such an option. Withdraw sums yourself periodically if you don't set up automatic withdrawals. Have income taxes withheld when periodic distributions are made to avoid a year-end tax burden. For some withdrawals, the IRA plan must withhold 20% of the taxable amount withdrawn as a prepayment of the taxes due. If you end up overpaying the amount of taxes owed for the year, you can get a refund on your tax return.

Step 4

Begin a minimum withdrawal for traditional IRAs at age 70 1/2. Follow Internal Revenue Service computations to determine the amount of this required minimum withdrawal based on money in the IRA and the taxpayer's life expectancy. Take more than the minimum if you want, but not less. Count these withdrawals as taxable income. The IRS says insufficient distributions might result in a 50 percent excise tax on amounts not distributed.

Step 5

Withdraw any amount from a Roth IRA tax-free if the IRA has been established for at least five years before age 59 1/2. You can take out money from a Roth whenever and in whatever amount you choose. Roth distributions do not have a required minimum withdrawal and can be retained past 70 1/2.