If you are 60 years old, you are at the ideal age to begin taking money out of your Individual Retirement Account, at least from a tax penalty standpoint. Once an IRA account holder turns 59 1/2, the Internal Revenue Service allows penalty-free withdrawals in almost all cases. However, depending on the type of IRA you have, you might be subject to regular income tax.
Contact your IRA custodian, which is usually the bank, brokerage, mutual fund company or other financial institution you opened your account with. If your financial adviser is authorized to make decisions and conduct transactions for your IRA account, he can make the call for you.
Inform your IRA custodian that you would like to begin taking withdrawals from your IRA. If you have a Roth IRA, and you have held the account for five years, all distributions come out tax free, even accumulated earnings, once you turn 59 1/2. With a traditional IRA, the IRS taxes the entire amount of the withdrawal at your current regular income tax rate.
Choose how to receive your money. You can liquidate the entire account in a lump sum or in multiple payments over time. Your IRA custodian can send you a check for the proceeds. In some cases, custodians offer other payment options including electronic bank transfers.
If you own a traditional IRA, the IRS requires that you begin taking money from it the year after you turn 70 1/2, according to IRS Publication 590. If you don't begin taking what the IRS calls your "Required Minimum Distribution," Uncle Sam will make you take your annual RMD–which is based your age, account value and life expectancy–and tack on a 50 percent excise tax on any RMD amounts you fail to withdraw.