Distributions at Retirement

If you own either a traditional or nondeductible IRA, you have several choices when you retire:

  • Placing it in an annuity that will guarantee payments over your lifetime.
  • Withdrawing your money in installments based on your life expectancy.
  • Taking your IRA money in a lump sum.

If you choose the lump sum, the entire amount will be taxed as ordinary income in the year of withdrawal. If you elect installments and pay income tax as the money is received, you must comply with IRS tables on life expectancy.

If you own a traditional or nondeductible IRA, you must start withdrawing money when you reach 70 ½ years old. However, distributions from a Roth IRA do not have to begin until age 70 ½.