Guidelines

• In the year you turn 70 1/2, you will begin your mandatory withdrawal schedule. The amount you withdraw will differ by year. In your first year, you can wait until the end of the year to take your distributions. After that, you must take them quarterly. If you fail to take the distributions, you will pay an excess accumulation penalty; here, the amount will depend on your income.
  
  

Calculations

• Calculating your required minimum distribution is a bit complicated. First, you will have to determine your life expectancy according to the Internal Revenue Service. You can consult Form 5329 to assist you. Your life expectancy will depend on your age, marital status, and other figures the IRS uses to determine this formula. As a result, your life expectancy is not a constant. Once you know how long the IRS predicts you will live for, you can divide your total retirement savings by this number. Divide again by four to determine your quarterly distributions. The goal is to withdraw your entire savings during your lifetime, so the IRS uses this formula to attempt and meet that goal
  
  

Special Considerations

• If you have more than one retirement account, you may be able to withdraw the entire sum from one account rather than a little bit from each account. This is only possible if the accounts are of the same structure; for example, this works for two traditional 401k accounts. If you do not feel you need to withdraw the money, you can take it out of a retirement account and place it in another type of savings account. There is no requirement you spend the money. The only requirement is you take it out of a qualified retirement account, as the IRS will no longer give you tax benefits on the money at this point.
  
  

Inherited Distributions

• If you have inherited a retirement account, you must take distributions according to the IRS' schedule or face a similar penalty. If you inherited the account from a spouse, you may be able to roll the funds into your own retirement savings, taking distributions as if it were your own account. Otherwise, if you inherited the account from someone other than a spouse, you will generally need to take the distributions in full within five years.