IRA rules for RMDs & other withdrawals
Guidelines for withdrawals
Withdrawals before age 59½
Withdrawals of Roth IRA contributions are always both tax-free and penalty-free. But if you're under age 59½ and your withdrawal dips into your earnings—in other words, if you withdraw more than you've contributed in total—you could be subject to both taxes and penalties on the earnings portion of the withdrawal.
Withdrawals of your traditional IRA contributions before age 59½ will result in regular income tax on the taxable amount of your withdrawal plus a 10% federal penalty tax —generally the entire amount—unless you qualify for an exception.
Withdrawals between ages 59½ & 73*
Restrictions relax at age 59½, and you can withdraw from a Roth or traditional IRA penalty-free.
In addition, with a Roth IRA, you'll pay no taxes on withdrawals, provided your account has been open for at least 5 years.**
With a traditional IRA, you'll owe taxes on the withdrawals of all earnings and any contributions you originally deducted from your taxes.
But remember: Turning 59½ doesn't mean you have to start withdrawing your money.
Withdrawals at age 73*
If you own a Roth IRA, there's no mandatory withdrawal at any age.
But if you own a traditional IRA, you must take your first required minimum distribution (RMD) by April 1 of the year following the year you reach RMD age. For each subsequent year, you must take your RMD by December 31. The RMD amount is based on your life expectancy and the prior year-end balance of your retirement account.
Withdrawals from an inherited IRA
In general, nonspouse beneficiaries that inherit an IRA from someone that passed away in 2020 or later may be required to withdraw the entire account balance within 10 years. Spousal beneficiaries and certain eligible nonspouse beneficiaries may be permitted to take RMDs over their life expectancy.
You won't pay taxes on withdrawals from an inherited Roth IRA if the original account owner held the IRA for at least 5 years.
But you will pay taxes on withdrawals from an inherited traditional IRA.
A word about loans from your IRA
Neither Roth nor traditional IRAs allow you to take loans, but you can access money from an IRA for a 60-day period through a "tax-free rollover" if you put the money back into the same or a different IRA within 60 days. You're limited to only one such "rollover" within a 12-month period, regardless of the number of IRAs you own. Taxes will be withheld from the distribution from your traditional IRA, so you’ll have to use other funds to roll over the full amount of the distribution.
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*Due to changes to federal law that took effect on January 1, 2023, the age at which you must begin taking RMDs differs depending on when you were born. If you reached age 72 on or before December 31, 2022, you were already required to take your RMD and must continue satisfying that requirement. However, if you had not yet reached age 72 by December 31, 2022, you must take your first RMD from your traditional IRA by April 1 of the year after you reached age 73.
**The 5-year holding period for Roth IRAs starts on the earlier of: (1) the date you first contributed directly to the IRA, (2) the date you rolled over a Roth 401(k) or Roth 403(b) to the Roth IRA, or (3) the date you converted a traditional IRA to the Roth IRA. If you're under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you're required to keep track of the 5-year holding period for each conversion separately.
You may wish to consult a tax advisor about your situation.
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