You cannot keep retirement funds in your account indefinitely. You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 70½. However, changes were made by the Setting Every Community Up for Retirement Enhancement (SECURE) Act which was part of the Further Consolidated Appropriations Act, 2020,P.L. 116-94, signed by the President on December 20, 2019. Due to changes made by the SECURE Act, if your 70th birthday is July 1, 2019 or later, you do not have to take withdrawals until you reach age 72. Roth IRAs do not require withdrawals until after the death of the owner.
Your required minimum distribution is the minimum amount you must withdraw from your account each year.
You can withdraw more than the minimum required amount.
Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
Do these rules apply to my retirement plan?
The minimum distribution rules discussed below apply to:
profit sharing plans
other defined contribution plans
Calculating the required minimum distribution
The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.” A separate table is used if the sole beneficiary is the owner’s spouse who is ten or more years younger than the owner.
worksheets to calculate the required amount
tables to calculate the RMD during the participant or IRA owner’s life:
Uniform Lifetime Table -for all unmarried IRA owners calculating their own withdrawals, married owners whose spouses aren’t more than 10 years younger, and married owners whose spouses aren’t the sole beneficiaries of their IRAs
Single Life Expectancy chart is used for beneficiaries who are not the spouse of the IRA owner
Joint Life and Last Survivor Expectancy chart is used for owners whose spouses are more than 10 years younger and are the IRA’s sole beneficiaries
Inherited IRAs - if your IRA or retirement plan account was inherited from the original owner, see "required minimum distributions after the account owner dies.
Consequence for failing to take required minimum distributions
If you do not take any distributions, or if the distributions are not large enough, you may have to pay a 50% excise tax on the amount not distributed as required.