Created: October 8, 2021
Modified: September 9, 2022

Episode 54: When Am I Required to Withdraw Money from my IRA?

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?

Get Your FREE Copy!

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!

Schedule Free 15-Minute Call
We want you to have the opportunity to have any questions about money answered with no obligation.
  • Sandy and Thomas C.
    Sandy & Thomas C. are clients of Johnson Brunetti and received no compensation for their statement.

    “We always felt our financial needs were in very capable hands. Alex Angst is great to work with. Our advisor always made us feel he had our best interests at heart and explained things so we could understand them.”

  • Robert G.
    Robert G. is a client of Johnson Brunetti and received no compensation for his statement.

    “We’ve been clients of Johnson-Brunetti for > 10 years. We’re enjoying a comfortable retirement as a result. Many thanks to Joel and our CFP, Eric Hogarth. I wish we had plugged into this decade approach back when we were in our 30s.”

  • Lisa D.
    Lisa D. is a client of Johnson Brunetti and received no compensation for her statement.

    “Working with Johnson Brunetti has had a positive impact on my life by providing me with the knowledge, confidence, and peace of mind to move forward with my retirement plans. The process of getting to this point, through their guidance, has been informative and pleasurable.”

  • Ken D.
    Ken D. is a client of Johnson Brunetti and received no compensation for his statement.

    “I view your company as one that puts my interests first. I think that is very uncommon and very refreshing. “

  • Jeanne P.
    Jeanne P. is a client of Johnson Brunetti and received no compensation for her statement.

    “Matt does an awesome job! So easy to understand and he listens to our concerns and addresses them! happy I chose your firm!”

  • Anonymous
    This testimonial was provided by a client of Johnson Brunetti and received no compensation for their statement.

    “I have been pleased with the help and service I have received from the company. I have met several team members on Eric’s team and have found all of them very well prepared to meet with me when reviewing my portfolio. I always feel that I am an important customer and appreciate that very much. I hope the firm continues to focus on the customer and maintains its great service. I think you do a great job for someone like me!!!! I’m happy I chose your firm!”

    Johnson Brunetti
    Welcome to Our New Website!
    Everything was designed with you in mind, making our retirement planning resources more easily accessible to you.
    Check out your new resource center, where everything can be organized by article type or topic
    Are you ready to speak with a financial advisor?
    Johnson Brunetti

    Investment Advisory Services offered through JB Capital, LLC.
    Insurance Products offered through JN Financial, LLC.
    Atlanta • Boston • Hartford | Tel: 800-208-7233

    JB Capital LLC is a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply any level of skill or training. Information presented is for educational purposes only and is not intended as an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.

    JB Capital's Form ADV | Disclaimer | Privacy Notice | Client Relationship Summary

    *Information about our Affiliation with the UConn Huskies

    Johnson Brunetti is a sponsor of WFSB Better Money, WCVB Better Money Boston, WSB-TV Better Money Atlanta, WTNH Money Wisdom, and WTIC Money Wisdom.