The Internal Revenue Service requires that all tax-deferred individual retirement accounts be subject to required minimum distributions, which limits how long the money can continue to grow without being taxed in the IRA. Tax-deferred IRAs include traditional IRAs, but not Roth IRAs.
Mandatory withdrawals begin the year that you turn 70 1/2 years old. Your first mandatory distribution must be taken by April 30 of the following year, but future mandatory withdrawals must be completed by Dec. 31 of that year.
The size of the mandatory distribution depends on two factors: your life expectancy and your account value. The IRS published life expectancy tables based on your age that you must use to estimate how long the IRA will be distributed over.
The IRS imposes a 50-percent penalty on the portion of a mandatory withdrawal not taken out by the deadline. For example, if you were supposed to withdraw $4,600 and did not, you would have to pay a $2,300 tax penalty.