Retirement Answers

When do I have to start taking distributions?

You must begin to withdraw money from your account no later than April 1 of the year following the year you turn age 70 ½ or when you retire, whichever comes later. Otherwise, you'll be stung with a 50% tax penalty of what you should have withdrawn. Even if you don't need the money when you retire, the IRS requires you to withdraw a minimum amount that is based on life expectancy and your account balance. Your life expectancy is determined by IRS guidelines. Make sure to consult your employer's benefits department and your financial advisor to get help in calculating the minimum distribution amount.

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If I'm still working after age 70 ½, do I have to take the required distributions?

Not if your 401(k) account is with your current employer. In this situation, you have to start taking distributions by April 1 of the calendar year following the year in which you retire.

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