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Question for the Money Doctors

Question submitted on Mar 23, 2012.

Question

At what age and what percentage must a person withdraw from their 401Ks and IRAs? Is there a penalty for not withdrawing on time?

Answer

Indiviudals must start withdrawing from their IRAs no later than April 1st of the year following the year he/she reaches 70 1/2.  Every year after the beginning year, the distribution must be taken by December 31st. 

The amount to be withdrawn is  based on a life expectancy table published by the IRS and depends on who the beneficiary of the account is.  The percent changes each year. 

The penalty for not withhdrawing the minimum required amount each year is 50% of the amount that should have been taken but was not.


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