Introduction to IRA Distributions

So, you finally got your individual retirement account and you are patiently awaiting the day when you can retire with it. Before that great day comes, however, it is important to understand how IRA distributions work.

Because of the tax savings benefits of an IRA, there are rigid rules about taking distributions. If you violate these rules, not only will you have to pay taxes on your distributions, you might also have to pay penalties on premature distributions.

Furthermore, because IRAs are intended to be for retirement funding, you are required to take minimal distributions after age 73 to discourage you from using this as a tax-free way to accumulate assets for your heirs. Failure to take minimum distributions can also result in severe tax penalties.

IRAs provide terrific tax benefits for retirement savings; however, you must follow the rules to get the maximum benefit and avoid penalties.

This tutorial will cover only the traditional IRA.