I have tried the IRS homepage but am left unclear.
Q.I am 53 and have been "retired" for about 5 years ( I do not work and do not plan on re-entering the workforce). I need to know where to find information on "when and in what amount" I can begin withdrawing assets from a traditional IRA without triggering any "special or unusual" taxable event. I have tried the IRS home page but am left unclear. Any help would be greatly appreciated.
A.After you reach age 59 1/2, you may withdraw whatever you want without triggering the 10% penalty that applies before that age. You would, though, be required to pay the income tax on your withdrawal depending upon what tax bracket you fall into. After age 70 1/2, you will be required to withdraw at least a minimum amount from such accounts.This minimum is based on a complicated formula, but you don't have to deal with that for now. See IRS Publication 590. One option you have is to establish a series of Substantially Equal Periodic Payment plan. This requires you to take substantially equal annual payments equal to an amount calculated to exhaust your IRA account at the end of your statistically calculated life span. Example: You have an IRA account valued as of 12/31/99 to be $300,000. The IRS calculates for your age you have a statistical lifespan of 30 years. You would take a distribution each year of $10,000. Once you begin an SEPP plan you must continue for 5 years and until your reach age 59 1/2. If you have multiple IRA accounts, you may select one of more account for which to apply the SEPP plan. When you are on an SEPP plan, the taxable portion of the distribution (from Form 8606, if applicable) is taxable income for that year, but you would file Form 5329 to exempt the distribution from the 10% excise tax.
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