Confused about IRA withdrawals between 59.5 and 70.5

[rodi]

A coworker told me that once you start taking money from an IRA/401k, you MUST take distributions each year, going forward.

I can't find anything to confirm that - just a lot of stuff about RMD's once you reach 70.5yo.

Example: retiree is 61 and has an unexpected expense. For cash flow reasons they'd like to pay for that expense from IRA or 401k money. Since the person is over 59.5 - they can access the tax deferred money penalty free. Obviously, they'd be paying taxes on the withdrawal.

Does this trigger mandatory withdrawals for following years?

I think my coworker is wrong.. but I'd like to know if he's right, and I'm wrong. This will make a difference in our spend-down plans.

 

[REWahoo]

Your co-worker is wrong.

 

[RockyMtn]

after 59 1/2 you can withdrawl without penalty (other than the taxes you owe). It does not trigger mandatory withdrawls for following years.

Mandatory withdrawls must begin at 70 1/2 and then occur yearly based on life expectancy at the time you turn 70 1/2.

 

[pb4uski]

Your co-worker is wrong.

+1

 

[youbet]

A co-worker told me that listening to financial advise given by co-workers is the leading cause of inadequately financed retirements today. If a co-worker told me, it must be true!

 

[rodi]

Thanks.
Part of my confusion about this came from an article that stated

(Tax rules require that once IRA withdrawals begin, they must continue.)

Coping with the financial toll of terminal illness - Dec. 13, 2012
That quote fails to mention that this is ONLY true if it's an inherited IRA/401k... different rules for inherited retirement accounts.
(The article is the follow up article to the one being discussed about end of life decisions/costs.)

I need to stop confusing myself. I was pretty sure I was right by so was my coworker (convinced he was right).

 

[rodi]

A co-worker told me that listening to financial advise given by co-workers is the leading cause of inadequately financed retirements today. If a co-worker told me, it must be true!

Too true.
Same with financial advice from relatives. Or worse - financial advise from relatives based on something *their* coworker told them.

LOL

 

[braumeister]

Moral: Never get your financial advice from a cow orker.

It's bad enough the poor cows have to put up with it; there's no reason you should.

 

[Rustward]

I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.

What you were told is not so.

 

[NW-Bound]

I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.

+1

 

[pb4uski]

Too true.
Same with financial advice from relatives. Or worse - financial advise from relatives based on something *their* coworker told them.

LOL

I hear you. 2 of my BILs sell life insurance and annuities.

 

[bondi688]

The RMD starting at 70.5 years old will be slightly less than 4% of the total asset within that IRA, so if you use the 4% rule, the RMD is automatically accounted for.

 

[Sarah in SC]

I wonder if your coworker is confusing the rules for a 72-T distribution (which apply if you want penalty-free access to IRA funds before 59.5) with distribution rules that apply after 59.5.

What you were told is not so.

This is exactly what the guy was talking about, I bet. Those do have to continue. The 72T is the Substantially Equal Periodic Payments dealie.

 

[Lcountz]

Rodi how old are you?

 

[Rustward]

This is exactly what the guy was talking about, I bet. Those do have to continue. The 72T is the Substantially Equal Periodic Payments dealie.

If I understand correctly, the 72-T distribution can be stopped after age 59.5 AND the distribution has been taken for a minimum of five years.

 

[kaneohe]

The RMD starting at 70.5 years old will be slightly less than 4% of the total asset within that IRA, so if you use the 4% rule, the RMD is automatically accounted for.

but only for a few yrs?