Distributions from Your Retirement Plan

Five Dates You Should Know

As you approach retirement, there are five important ages you need to remember because they have a direct impact on how and when you may want to withdraw assets from your qualified retirement plans:

  • Age 55. If you take early retirement, quit your job or separate from service at age 55, you can receive your money from your qualified retirement plans without paying a 10% early withdrawal penalty to the IRS (see the section Taxation of Distribution Options). Note: This rule does not apply to IRAs.
  • Age 59½. Anyone age 59½ or older can withdraw money from their traditional IRA, from a Roth IRA if it was held five years, or from a qualified retirement plan if the plan provisions allow withdrawals, without the 10% penalty applying. You also may be able to receive a lump-sum distribution from your retirement plans. However, if your retirement plan allows, you can withdraw funds from your plan or traditional IRA prior to age 59½ without penalty, if you take the withdrawals in substantially equal annual payments based on your life expectancy.
  • Age 62. You can begin receiving reduced Social Security benefits. Also, some companies will allow you to receive full pension benefits with no early retirement reduction, if you retire at age 62.
  • Age 65. You are eligible for Medicare coverage and possibly full Social Security benefits, and at most companies, full pension benefits. (If you were born after 1937, the age at which you are eligible for full Social Security benefits is increasing (see the section on Social Security benefits.)
  • Age 72 (70½ if you reached age 70 1/2 by January 1,2020). You have to begin making withdrawals from traditional IRAs and possibly other plans, the minimum amount depends on the balances in your plans, as well as your remaining life expectancy , and usually your spouse's life expectancy (see the section Taxation of Distribution Options). If you are still employed, distributions from your qualified retirement plan may be able to be deferred until you actually retire.
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