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Personal Finance and Savings

Everything You Need to Know About Retirement Distributions

Federal law requires that you begin receiving distributions from your retirement accounts by April 1 of the year following the year in which you reach age 72. The withdrawals must occur on a yearly basis and continue until you are deceased or until your accounts are depleted.

Traditional IRA & 401(k) Distributions

If you have more than one IRA, you may take the required minimum distribution from any one or more of the individual IRAs.

The distributions you receive from these accounts are taxed as income. However there are some exceptions. Distributions from an IRA to a qualified charity when age 70½ , certain distributions used to fund an HSA (health spending account), or 401(k) distributions rolled over to a traditional IRA or a new 401(k) account are not taxable. For more information see instructions for Form 8606, Nondeductible IRAs at

Rollovers & Transfers

A rollover occurs when money is moved from a retirement plan to an IRA or one IRA to another IRA. A transfer occurs when you request the financial institution to transfer money directly from your IRA or retirement account to another IRA or a retirement account – old 401(k) to new 401(k).

Generally, rollovers and trustee-to-trustee transfers are not taxable distributions. However, if you do not rollover the same amount of money you withdrew or you went beyond 60 days to roll the funds over to another account, the distribution is taxable. The most common rollover trap occurs when you withdraw the money from a pension plan, there will be an automatic 20% withholding and you put the amount you received into the new account.  The amount sent to the IRS as withholding is considered distributed and was not rolled over. Rollover distributions handled by the plan trustee generally have no withholding and are identified by a Code G or H in box 7 of Form 1099-R.


Don’t take distributions before age 59½ to avoid the 10% tax for early withdrawals.

Roth Distributions

Distributions from a Roth IRA or a Roth 401(k) are generally not taxable. If you take a distribution from the account before age 59 1/2 or before the account is less than five years old, you may be required to pay an additional 10% tax on some, or all, of the early distribution amount.

Early Distributions

Distributions from a traditional IRA or from a traditional (non-Roth) retirement account before you reach age 59 1/2 are subject to an additional 10% tax. There are some exceptions. For instance, if you are permanently disabled, the beneficiary of a deceased IRA owner, or purchasing a first home as well as other circumstances. 

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