What Is the Minimum You Must Take Out of Your IRA When You Are 70-1/2?

The money deposited in an Individual Retirement Account and accumulated over the years has the benefit of providing annual tax deductions and tax-deferred growth. As of 2011, IRA rules stipulate that a retiree must begin withdrawing at least a minimum amount of retirement income, starting at age 70 1/2.

Required Distribution Timeframe

The first minimum required IRA distribution starts the year the IRA owner turns age 70 1/2, and must be withdrawn from the account by March 31 of the following year. In subsequent years, withdraw the minimum distribution from the IRA by December 31. You will claim two minimum withdrawal amounts on your income taxes after the first year you take RMDs, if you wait until the last days to make these withdrawals.

IRA Basis for Withdrawal

Use the value of the IRA on December 31 the year before turning age 70 1/2 to calculate the first required minimum distribution. If the IRA owner has multiple IRAs, use the value of each IRA on that date to calculate the required distribution for each separate IRA. You could withdraw the total required distribution from one of the IRAs.

IRA Distribution Factor

To calculate the amount of the minimum IRA distribution for age 70 1/2 requires a life expectancy factor. The life expectancy tables are in Appendix C of IRS Publication 590. Most IRA owners will use the Uniform Lifetime Table. As of 2011, the possible life Uniform Lifetime factors for someone turning age 70 1/2 are 26.5 for those reaching 70 1/2 in the first half of the year and 27.4 for IRA owners turning 70 1/2 in the second half of the year. An IRA owner with a spouse more than 10 years younger, whose spouse is the sole beneficiary to the IRA, must use the Joint and Last Survivor Table.

Calculating RMDs

The RMD is the IRA account value divided by the appropriate life expectancy factor. For example, for a $100,000 IRA and a factor of 26.5, the RMD is $3,773.58. IRA owners can always withdraw larger amounts, but these excess distributions do not count toward future RMDs. The 27.4 factor results in a required distribution of $3,649.64 from a $100,000 IRA balance.


About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.