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Once funds are in an IRA, how can the investor withdraw the funds?

There are four ways funds can be withdrawn from an IRA. Some are tax-free, some have tax penalties. Clients and/or beneficiaries should always discuss these actions with their tax advisor.

  • After age 59 1/2, the IRA owner may take penalty-free distributions from the IRA. These distributions will be taxable in a traditional IRA but not taxable in a Roth IRA.  A percentage of the funds must be withdrawn from an IRA every year once the investor turns 70 ½ years of age. This is the Required Minimum Distribution (RMD). There is an IRS-generated chart that identifies the percentages of the total fund that must be withdrawn annually. These funds will likely be taxable.
  • The investor may request a withdrawal that will be taxable. Once the investor is over age 70 ½, a withdrawal can be requested in addition to the RMD.
  • The assets in an IRA may be transferred to a different IRA custodial firm.
  • The assets in the IRA can be distributed or rolled over to a beneficiary upon the death of the IRA owner.