After you reach age 70-1/2, you must take required minimum distributions (RMDs) from your IRA. The RMD rules spell out the least amount you can withdraw from your IRA, in order to avoid a 50% penalty. You always can take out as much as you want from your IRA but you’ll owe income tax and usually a 10% penalty before age 59-1/2.
The IRS publishes a table (www.irs.gov/pub/irs-pdf/p590.pdf, p. 106) that most people can use to calculate RMDs. However, if your beneficiary is a spouse who is more than ten years younger than you are, you can use your actual joint life expectancy to reduce RMDs. That table also can be found in IRS Publication 590, starting on page 92.
Say you’re 73 and your sole IRA beneficiary is your spouse, age 70. Under the standard table, on page 106, your "distribution period" is 24.7 years. Thus, you must withdraw at least 1/24.7 of your year-end 2010 IRA balance this year.
If you had $100,000 in your IRA on December 31, 2010, you’d divide $100,000 by 24.7 to get $4,0439: that’s the minimum amount you must take out (and pay tax on) this year.
