Episode 54: When Am I Required to Withdraw Money from my IRA?
Have your question answered on the Money Wisdom Question Series!
Welcome to Money Wisdom. Today’s question is, “When am I required to withdraw money from my IRA?”
Whether you want/need to spend the money in your IRA or not, the IRS forces you to start drawing from your account at age 72. If you don’t take the money out, the penalty is 50 percent, so it’s important to make sure that you get this number right. If you left your retirement money in a plan from your employer, such as a 401(k) or a 403(b), you are forced to withdraw it out of that account. It’s important to consider that there’s an automatic tax withholding, which might be more than you actually need to withhold. Therefore, this may not be ideal.
Required Minimum Distribution (RMD)
Most folks roll money out of their plan at work and into an IRA. The primary reason for doing so is to have more control. One of the things you would have more control over is whether you’re going to take your RMD out of that account or out of another one. For example, if you have 10 different retirement accounts, you don’t necessarily have to take your withdrawal out of every single one of them. Again, the penalty for not taking money out is 50%, so be careful.
Important Questions to Consider
- How much is required to take out?
- Where does it make the most sense to withdraw that money from?
- How do you want to take it?
Some people prefer a direct deposit into the bank. Others opt to take the money all at once. Either way, you have to be careful here when it comes to taxes. If you make a mistake, suddenly it’s tax time and you have to write a big check to the IRS that you weren’t anticipating and that can mess up the plan.
Why is Age 72 Important?
Age 72 is the point at which you have to start drawing this money out. Whenever you’re going to retire, a big part of the conversation is knowing where exactly your income is going to come from and how to do the right thing tax wise. You’re forced to take out anything that you’ve left in your retirement accounts, whereas if you move the money into a Roth, you’re not. Maybe that makes sense. Make sure to have those conversations and do it well before age 72.
Thanks for joining me and I hope you found this information helpful!
P.S. If you enjoyed this topic and want to learn more, download your copy of our digital offer, “ROTH IRA Conversions: 7 Things to Know”.
P.P.S. Feel free to submit questions here for a chance to have them answered!
Information presented here is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
Related Resources
-
What Tax Moves Should I Consider Before the End of the Year?
According to a recent study, 46% of Americans say tax season is the most stressful financial time of the year. The good news is that there are several proactive steps you can take before year-end … -
What’s the Best Way to Leave an Inheritance?
Leaving an inheritance is about more than transferring wealth. With thoughtful planning, you can help maximize the value of what you leave behind and simplify the process for your loved ones. I… -
What Are the Best Types of Accounts for Investing?
Different investment accounts offer different advantages. From tax benefits and contribution limits to withdrawal rules, each account serves a unique purpose. Understanding how these accounts work… -
I’m Turning 65, Why Do I Need to Stop My HSA Contributions?
If you’re nearing your mid-60s and actively contribute to a health savings account (HSA), you’ve likely used it to cover qualified medical costs. However, as you get closer to enrolling in Medicar… -
How Can I Enjoy My Retirement Savings Without Fear of Overspending?
The fear of running out of money keeps many retirees from truly enjoying their hard-earned savings without worry. After decades of nurturing your nest egg, the thought of seeing your progress slip… -
Do I Need Life Insurance in Retirement?
Around 52% of Americans own some type of life insurance policy. But once you retire, some of your biggest financial obligations may be behind you. When you reach this point, you may wonder whether… -
How Will Social Security Be Funded in the Future?
Without congressional action, current projections indicate Social Security will pay only 78% of benefits starting in late 2032. This funding gap highlights our growing disparity between workers pa… -
How Should I Withdraw From My 401(k) Before I’m Forced To?
When turning your investments into retirement income, it’s important to consider the impact of taxes. Once required minimum distributions (RMDs) begin, you’ll generally have to withdraw money from… -
I’m 10 Years Away from Retirement – What Should I Be Doing?
If you’re about 10 years from retirement, now is the time to start building a plan for the life you want to live. Think about how you want to spend your time in retirement and the lifestyle you en… -
What’s the Difference Between a Roth IRA and a Traditional IRA?
An individual retirement arrangement (IRA) is a powerful investment vehicle. These accounts help you save for retirement on your own, without an employer. But the tax benefits vary significantly d…
-
Richard S.Richard S. is a client of Johnson Brunetti and received no compensation for his statement.
“We have been extremely happy with our advisor and the services offered. We previously had accounts with another advisor. We had no issues, but chose to consolidate everything with Johnson Brunetti. We made a great decision with that.”
Testimonials received in response to Johnson Brunetti survey conducted in 2024 and in 2026. Please click each respective year for a description of the respective survey and a summary of the survey results.
-
John & Laura U.John & Laura U. are clients of Johnson Brunetti and received no compensation for their statement.
-
Joe D.Joe D. is a client of Johnson Brunetti and received no compensation for his statement.
“Your model is working well, continue to keep your focus on your clients. The podcasts are an effective way of communicating information and real life stories. Your business is supporting your clients’ many different real life stories.”
Testimonials received in response to Johnson Brunetti survey conducted in 2024 and in 2026. Please click each respective year for a description of the respective survey and a summary of the survey results.
-
Jackie L.Jackie L. is a client of Johnson Brunetti and received no compensation for her statement.
“I love how everyone in the company makes us feel. Like we are one big happy family. I wouldn’t change anything!”
Testimonials received in response to Johnson Brunetti survey conducted in 2024 and in 2026. Please click each respective year for a description of the respective survey and a summary of the survey results.
-
Donald & Donna K.Donald & Donna K. are clients of Johnson Brunetti and received no compensation for their statement.
“It’s been one of the best things my wife and I have ever done. The clarity, support, and professionalism have made a real difference for us.”
Testimonials received in response to Johnson Brunetti survey conducted in 2024 and in 2026. Please click each respective year for a description of the respective survey and a summary of the survey results.
-
Annette L.Annette L. is a client of Johnson Brunetti and received no compensation for her statement.
