When must I begin to take distributions from my retirement assets?

By David G. Henry

To avoid the financial penalties imposed under the Internal Revenue Code, you must begin to take distributions from your accounts in qualified retirement plans by the "Required Beginning Date", or RBD, and that date depends upon the type of retirement plan account you own. For traditional IRA accounts, your RBD is April 1 of the calendar year following the calendar year in which you attain the age of 70-1/2 years. For qualified retirement plan accounts, your RBD is April 1 of the calendar year following the later of (i) the calendar year in which you attain the age of 70-1/2 years or (ii) the calendar year in which your retire. If, however, you own more than 5% of the outstanding stock of the corporation that sponsors the plan (or more than 5% of the capital interest or profits interest of the unincorporated entity that sponsors the plan), the RBD for your account in such plan is April 1 of the calendar year following the calendar year in which you attain the age of 70-1/2 years. In all cases, you are permitted to begin to take distributions before your RBD although planning is required for distributions which will be made before you attain the age of 59-1/2 years to avoid financial penalties imposed under the Internal Revenue Code.